First time home buyers in British Columbia have several benefits available to them when buying a home. As a mortgage broker our goal is to make sure you can take advantage of these opportunities available to ensure you can purchase a home and try and utilize all of the advantages available to you.
Property Transfer Tax Exemption in British Columbia
In general, when you buy a property BC, you will pay a tax for purchasing the property. The tax is 1% on the first $200,000 and 2% on the remainder over that. Therefore on a $500,000 property you will pay $2000 plus $6000 for a total of $8000. You may get an exemption on paying this tax if you are a first time home buyer. The exemption usually occurs if your purchase price is less than $500,000. If the purchase price is between $500,000 and $525,000 there is a proportionate exemption and if the price is over $525,000 there is no exemption. Below is a list of the qualifications for first time home buyers to obtain the exemption. Any questions regarding an exemption to this tax should be referred to your lawyer or notary.
The first time home buyer must:
– be a Canadian citizen or permanent resident
– have lived in B.C. for 12 consecutive months immediately before the date you register the property or filed at least 2 income tax returns as a B.C. resident in the last 6 years
– have never owned an interest in a principal residence anywhere in the world at any time
– have never received a first time home buyers’ exemption or refund
And the property must:
– be located in B.C.
– only be used as your principal residence
– have a fair market value of:
$500,000 or less
– be 0.5 hectares (1.24 acres) or smaller
You may qualify for a partial exemption from the tax if the property:
– has a fair market value less than $525,000
– is larger than 0.5 hectares
– has another building on the property other than the principal residence
One more important thing to note in the province of BC. If you are purchasing a brand new home you are exempt from paying the transfer tax on homes with a price up to $750,000. This is available to all buyers not just first time home buyers. You can confirm if you are eligible for this with your lawyer or notary.
Use your RRSP’s Tax Free for your Down Payment
As a first time home buyer you are eligible to withdraw up to $35,000 of your RRSP tax free in order to buy a home. In order to qualify you must meet the following conditions:
– You must be considered a first time home buyer.
– You must have a written agreement to buy or build a qualifying home for yourself.
– You must have a written agreement to buy or build a qualifying home for a related person with a disability, or to help a related person with a disability buy or build a qualifying home (obtaining a pre-approved mortgage does not satisfy this condition).
You must intend to occupy the qualifying home as your principal place of residence within one year after buying or building it. In all cases, if you have previously participated in the HBP, you may be able to do so again if your repayable HBP balance on January 1st of the year of the withdrawal is zero and you meet all the other HBP eligibility conditions. You are considered a first time home buyer if, in the four year period, you did not occupy a home that you or your current spouse or common-law partner owned.
Even if you or your spouse or common-law partner has previously owned a home, you may still be considered a first time home buyer. If you have a spouse or common-law partner, it is possible that only one of you is a first time home buyer. If you are not considered a first-time buyer now, you may be considered a first-time home buyer later, once the four-year period has passed.
Do you meet the RRSP withdrawal conditions?
– You have to be a resident of Canada at the time of the withdrawal.
– You have to receive or be considered to have received, all withdrawals in the same calendar year.
– You cannot withdraw more than $35,000.
– You have to be a resident of Canada when you receive funds from your RRSPs under the HBP and up to the time you buy or build a qualifying home.
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