6 Programs for First-Time Home Buyers

Buying your first home is a monumental step in anyone's life, and it’s a journey filled with excitement, anticipation, and a touch of anxiety.  You're not just purchasing a property; you're investing in your future, your comfort, and your own little piece of the world. 

In British Columbia, this dream is within reach thanks to several incredible programs designed to help first-time home buyers make informed decisions and leverage all the available government programs and rebates.

If you're a first-time home buyer, now is the time to explore these six essential programs that can make your dream of owning a home a beautiful reality.

1) First Homes Savings Account (FHSA):

BC's First Home Savings Account is a flexible and tax-efficient way to save for your first home.  You can contribute up to $8,000 annually, up to a maximum lifetime contribution of $40,000 towards your down payment.  The best part?  These contributions are tax-deductible (like an RRSP), and any capital gains and interest earned within the account are tax-free.  This program complements the RRSP Home Buyers Plan beautifully, providing first-time buyers with multiple avenues to secure their new home.

To qualify for the First Homes Savings Account, you must meet all of the following criteria:

• Be at least 18 years old and not more than 71 years old
• Be a resident of Canada
• Be a first-time home buyer

How do you open your First Home Savings Account?

Most major banks and credit unions are able to open a FHSA for you, and will require some basic information in order to begin the process, such as:

• Your social insurance number
• Your date of birth
• Any supporting documents your bank may need to certify that you are a qualifying individual

Read more on the First Home Savings Account here

2) RRSP Home Buyers Plan (HBP):

The Home Buyers Plan empowers first-time buyers to withdraw up to $35,000 per person, or $70,000 per couple, from their RRSP accounts to use as a down payment on a new home.  It's a strategic way to leverage your retirement savings for a significant life investment, helping you to kickstart your journey to home ownership.

To qualify for the RRSP Home Buyers Plan, you must meet all of the following criteria:

• You have to be a first-time home buyer
• You must have a written agreement to buy a qualifying home
• You have to be a resident of Canada throughout the period that starts when you make your first eligible withdrawal
• You must intend to live and occupy the qualifying home as your primary residence within one year after buying

What’s great about this program is it can work in tandem with the First Home Savings Account (FHSA) for the same qualifying home, as long as you meet all of the conditions at the time of each withdrawal.

However, it’s important to know that with the RRSP Home Buyers Plan, the funds taken from the account must be fully paid back within a 15-year period.  This means if you withdraw the maximum contribution of $35,000 in 2023, then by 2038 you must put back the same amount.

Read more on the RRSP Home Buyers Plan here

3) Newly Built Homes Exemption:

If you're considering a presale or newly built home, you may be exempt from paying Property Transfer Tax (PTT) on properties valued up to $750,000.  There are even partial exemptions for homes priced between $750,000 and $800,000.  This exemption is an incredible opportunity for first-time home buyers to save considerably on their new home purchase.

What constitutes a newly built home?

• A new apartment or condominium in a newly build condominium building or development
• A new house that is constructed and affixed on a parcel of vacant land
• A manufactured home that is affixed on a parcel of vacant land

To qualify for the Newly Built Homes Exemption, you must meet all of the following criteria:

• Be an individual
• Be a Canadian citizen or permanent resident

and the property must:

• Be located in B.C.
• Only be used as your principal residence
• Have a fair market value of $750,000 or less
• Be 0.5 hectares (1.24 acres) or smaller

It is also possible for you to qualify for a partial exemption if the property:

• Has a fair market value of more than $750,000 and less than $800,000
• Is larger than 0.5 hectares
• Has another building on the property other than the principal residence

Read more on the Newly Built Homes Exemption here

4) First Time Home Buyers Income Tax Credit:

This program provides a helping hand to first-time home buyers, offering the opportunity to claim up to $10,000 per household, resulting in a maximum tax credit of $1,500.  This credit is applicable from 2022 onward, brings much-needed relief to your overall expenses when purchasing a qualifying home.

To qualify for the First Time Home Buyers Income Tax Credit, both of the following must apply:

• You (or your spouse or common-law partner) acquired a qualifying home
• You did not live in another home inside or outside Canada that you (or your spouse or common-law partner) owned in the year of acquisition or in any of the four preceding years (first-time home buyer)

Secondly, a qualifying home:

• Can be a single-family house, semi-detached house, townhouse, mobile home, condominium unit, or apartments in duplexes, triplexes, fourplexes, or apartment buildings.
• Must be registered in your or your spouse's or common-law partner's name
• Must be located in Canada
• Includes both existing homes and homes under construction
• You or a related person with a disability, must occupy the home as a principal place of residence no later thanone year after it is acquired.

How do you get the First Time Home Buyers Income Tax Credit?

In order to receive your income tax credit, you will enter $10,000 on line 31270 when completing your tax return.  If you and your spouse or common-law partner are going to be splitting the claim, you just need to remember that the combined total cannot be more than $10,000.

Read more on the First Time Home Buyers Income Tax Credit here

5) First Time Home Buyers Property Transfer Tax (PTT) Program:

If your new home has a fair market value of $500,000 or less, you're in line for a full Property Transfer Tax exemption.  This program could save you approximately $8,000 and makes acquiring your first home more achievable.

To qualify for the First Time Home Buyers Property Transfer Tax exemption, at the time the property is registered you must:

• Be a Canadian citizen or permanent resident
• Have either:
  • Lived in B.C. for at least 1 year immediately before the date you register the property
  • Filed at least 2 income tax returns as a B.C. resident in the last 6 taxation years immediately before the registration date
• Have never owned a property that was your principal residence anywhere in the world, at any time
• Have never received a first-time home buyers' exemption or refund

Secondly, the property must:

• Only be used as your principal residence
• Has a fair market value of $500,000 or less
• Be 0.5 hectares (1.24 acres) or smaller

It is also possible for you to 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

Read more on the First Time Home Buyers Property Transfer Tax (PTT) Program here

6) GST/HST New Housing Rebate:

When purchasing a presale or newly built home, you'll have to pay a 5% GST on the total purchase price.  However, if your home's price tag is $350,000 or less, you can apply for a rebate, which could potentially save you up to $6,300.  Even for homes priced between $350,000 and $400,000, a reduced rebate is available. This program aims to ease the financial burden on first-time buyers and encourage home ownership.

Read more on the GST/HST New Housing Rebate here

Final Thoughts on the 6 Programs for First-Time Home Buyers

These six programs exemplify British Columbia's commitment to supporting first-time home buyers, with varying factors for each program.  With a range of financial incentives and tax credits available, there's never been a better time to take the exciting step toward homeownership in this stunning province. Make your dream a reality and explore these programs to secure your first home in beautiful British Columbia.