If you are a first time buyer, and have assets invested in an RRSP, you can withdraw up to $20,000 to apply towards the purchase of a home. You are considered a first time home buyer if you have not lived in a home owned by yourself or your spouse in the last five years.
In addition to being a first time home buyer, you must have entered into a written agreement to buy or build a home and intend to occupy that home as a principal residence. Any funds you wish to withdraw under the program must have been in your RRSP for at least 90 days. If you have less than $20,000 in an RRSP, its not too late to save money. You can make a contribution to your RRSP early in the year before the RRSP deadline. You can then receive a tax refund and 90 days later withdraw the RRSP contribution for use in buying a home.
Once you have applied the RRSP funds to the purchase of your home, you are required to pay back the RRSP over 15 years. Ordinarily, you will deposit 1/15 of the amount withdrawn back into your RRSP in each of the 15 years following your home purchase. If you fail to repay an amount required in any given year, then that amount will be included in your taxable income for the year.
First Time home buyers are eligible to receive a discount of up to $2,000 off their Ontario Land Transfer Tax. For this program a first time buyer is a buyer at least 18 years old who has not owned an interest in a home anywhere in the world, and whose spouse has also not owned an interest in a home anywhere in the world while he or she was married to the home buyer.
If you are a first time buyer, but your spouse owned a home before you were married, you will generally qualify for the rebate. If, however, your spouse owned a home, even in his or her name only, while you were married, you are disqualified from claiming the rebate. You will be disqualified even if you are a common law spouse under the Family Law Act. That definition applies if you were living together for three years, or for a lesser time if you have a child together.
Toronto Land Transfer Tax Rebate for First Time BuyersIf you have any more questions, or require a lawyer for the purchase of a home contact Bryan Dale today!