British Columbia's government has established several programs to assist first-time homebuyers with their financial burden. While not all of the programs may be applicable to your particular situation, it is beneficial to become aware of them to navigate the home-buying process and potentially save you money.
Below are some of the main programs and options available to first-time homebuyers that you
should become acquainted with.
RRSP Home Buyer’s Plan
The Home Buyers' Plan (HBP) is a program that permits individuals to withdraw up to $35,000
tax-free from their registered retirement savings plans (RRSPs) during a calendar year to use as
a down payment when purchasing or constructing a qualifying home for themselves or a related
individual with a disability. The funds must have been held in the RRSP for at least 90 days
before the home purchase to qualify.
The Home Buyers' Plan is advantageous to Canadians because early withdrawals from RRSPs
are typically subject to taxation. However, under this program, such withdrawals are exempt. It's
important to note that borrowers must start repaying the withdrawn amount from their RRSP two
years after the purchase, and this repayment is spread over 15 years.
First Time Home Buyers Program: Property Transfer Tax Exemption
The property transfer tax cost is as follows:
1% on the 1st $200,000
2% on the balance up to $2,000,000
3% on the balance above $2,000,000
If you are a first-time home buyer that is planning on using the home as your primary residence
and purchasing a home for less than $500,000 then you may be eligible for a full exemption.
There are also partial exemptions up to $525,000. To qualify for a full exemption, at the time the
property is registered you 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
First-Time Home Buyer’s Tax Credit
The First-time Home Buyer's Tax Credit is a program that provides Canadian first-time home
buyers with the chance to recoup some of the expenses related to their home purchase. It helps
to cover expenses such as legal fees, inspections, and other closing costs.
This tax credit is a non-refundable credit of $10,000 and provides a maximum tax rebate of
$1,500 as of 2023 (previously $750 until the approval of the 2022 budget).
First-Time Home Buyer Incentive
The first-time home buyer incentive is a program provided by the government that offers a
shared equity mortgage (loan) to help individuals purchase a home. Under this program, the
government invests in the property with the home buyer. The incentive does not accrue interest
and does not require ongoing payments. However, the loan must be repaid within 25 years of
the sale of the property, whichever comes first. It's essential to note that this incentive is a loan
and is distinct from the BC HOME Partnership, which was a down payment matching scheme.
In a shared equity mortgage, the government shares both the upside and downside of the
property value. As a result, the loan amount is based on the fair market value at the time of
repayment and is either 5% or 10%, depending on whether the purchase was for a resale or
GST New Housing Rebate
For newly built homes, first-time home buyers can apply for a GST credit from the government
and/or the developer. The GST in BC is equal to 5%, and as a home buyer, you may be eligible
for a rebate of 36% of the 5% GST. There is a full general rebate for homes that are under
$350,000 where a buyer intends on living an his/her permanent residence, and there are partial
rebates up to $450,000.