First Time Homebuyer Tips – Property Buying 101
First time homebuyers face plenty of rules, regulations and paperwork. But there are ways to help streamline the process, and perhaps save some money at the same time. One way is to take advantage of tax credits and some RRSP benefits.
If this is your first home, you are entitled to the First Time Home Buyers Tax Credit. That means you have a $750 federal deduction that you can claim for the year that you buy that home. To qualify, you, your spouse or significant other may not have owned another home for at least four years prior to the current home purchase. You must live in the home, not rent it out, and you must move in within one year of the closing date. One of you make take the credit, or you may share it.
Another option is the RRSP Home Buyers Plan, where you may take out up to $25,000 from your RRSP account to put towards that home. Your spouse or partner may also withdraw $25,000 from their account. This money must go towards purchasing the same piece of property.
If you have not owned a home in the previous four years, then you may opt to not pay taxes on the withdrawn amount. Again, you must live in the home, moving in within a year of the closing date. The withdrawals must be paid back within 15 years, starting one year from when the money was taken out. One fifteenth of the withdrawn amount must be repaid each year, but there is no interest.