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Uncovering the Best Incentives for First-Time Home Buyers in Toronto

Buying a home for the first time is an exciting milestone in anyone's life. However, it can also be an overwhelming process, especially in a city like Toronto, where the housing market is highly competitive and expensive. Fortunately, there are many incentives available to help first-time homebuyers navigate the Toronto real estate market.

In this article, we'll explore the best incentives for first-time homebuyers in Toronto, ranked by their effectiveness in making homeownership more accessible and affordable.

• Home Buyers' Plan (HBP)

The Home Buyers' Plan (HBP) is a federal program that allows first-time homebuyers to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) tax-free to put towards a down payment on their home. This program can be particularly helpful for those who have been diligently saving for their retirement and have a significant amount of money in their RRSP.

• Land Transfer Tax Rebate

In Toronto, first-time homebuyers are eligible for a rebate on the municipal land transfer tax, which can save them up to $8,475. The rebate is available for first-time home buyers in British Columbia & Ontario, and is calculated on various tiers of the purchase price. It is best and easiest to use a land transfer tax calculator, and a general rule of thumb in Ontario is you will receive the maximum rebate for nearly all purchases which is $4000 on the provincial tax, and $4475 on the municipal tax, if your purchase is within Toronto.  This rebate is a significant help for first-time buyers who are trying to save as much as possible on the upfront costs of buying a home.

• First-Time Home Buyer Incentive

The First-Time Home Buyer Incentive is a federal program that helps first-time buyers by providing them with a shared-equity mortgage with the Canada Mortgage and Housing Corporation (CMHC). The program allows buyers to finance a portion of their home purchase through a shared equity mortgage with CMHC, which lowers the monthly mortgage payment. The program can save homebuyers up to 10% on the purchase price of their home, which can be particularly helpful for those who are struggling to save for a down payment.

• First Home Savings Account (FHSA)

First-time homebuyers now have a new tax-free way to save for their first home thanks to First Home Savings Accounts, or FHSAs. It's a registered plan that just went into effect on April 1, 2023, and you can contribute up to $8000 annually with a lifetime cap of $40,000. The FHSA's ability to be used for more than just a down payment is a nice feature. You can transfer this money to an RRSP or RRIF without affecting your contribution space if you decide to use it for something other than a home. Since these donations are tax deductible, your taxable income for the current year decreases.

• GST/HST New Housing Rebate

The GST/HST New Housing Rebate is a federal rebate that can help first-time homebuyers save money on the purchase of a newly constructed home. The rebate is available to anyone who buys a new home or substantially renovates an existing home, as long as the home is their primary place of residence. The rebate can save homebuyers up to 36% of the GST/HST paid on the purchase price of the home.

• Municipal Programs

Finally, many municipalities in Toronto offer additional incentives to first-time homebuyers. These incentives can vary widely but may include things like tax rebates, grants, or forgivable loans to help cover the cost of a down payment. Buyers should check with their municipality to see if there are any additional incentives available to them.

In conclusion, buying a home in Toronto can be a daunting task, but there are many incentives available to help first-time buyers. From the Home Buyers' Plan to municipal programs, these incentives can help make homeownership more accessible and affordable. Buyers should do their research and take advantage of these incentives to help make their dream of owning a home in Toronto a reality.

Tags

• land transfer tax rebate (1)
• first home savings account (FHSA) (1)
• municipal programs (1)
• home buyers' plan (HBP) (1)
• first-time home buyer incentive (1)
• GST/HST new housing rebate (1)