There are several support measures and programs for first-time buyers in Canada, including the Homebuyer plan and that the primary constructing society account (FHSA). First-time home buyers may be eligible for Real estate transfer tax reductions.
If you’ve got already taken advantage of considered one of these incentives up to now, you almost certainly need not accomplish that a second time. But there are quite a few explanation why it is advisable to take part in a first-time homebuyer program again – and you may qualify.
“It really depends on the program,” says Denise Laframboise, a mortgage broker with LaframboiseMortgage.ca in Brooklin, Ontario. “Each program has its own criteria for [qualifying as a] First-time home buyers. There isn’t any one-size-fits-all solution for all programs and all provincial or municipal incentives.”
Can you qualify twice as a first-time home buyer?
Yes. However, each homebuying program in Canada has its own definition of “first-time homebuyer,” and you could meet that definition to qualify. Read more about Canada’s first-time homebuyer programs and whether you should use their advantages greater than once.
The Home Buyers’ Plan
Upcoming changes to the Home Buyers’ Plan
The 2024 federal budget proposes to extend the HBP withdrawal limit from $35,000 to $60,000 per person. The recent limit would apply to withdrawals made after April 16, 2024. The budget also proposes to temporarily increase the beginning date for repayments by three years, in order that they start within the fifth 12 months after the withdrawal.
The Home Buyers’ Plan (HBP) is a government program that enables first-time homebuyers to withdraw as much as $35,000 from their registered retirement savings plan (RRSP) to purchase or construct a house. Couples buying a house jointly can withdraw as much as $70,000 from their RRSP. The HBP works like a self-loan in that borrowers must pay back their RRSP steadily over 15 years. If they do not, a portion of the funds withdrawn are taxed as income annually.
The HBP defined a first-time home buyer is defined as someone who has neither owned a house nor lived in a house owned by their current spouse or domestic partner inside the past 4 years. This last part opens the doors of the HBP to second-time home buyers. As long as your own home purchase falls outside the four-year period, you should use money out of your RRSP to purchase a second home without incurring the tax implications of a withdrawal.
Note that the eligibility window is longer than it seems. It begins on January 1 of the fourth 12 months before you withdraw money out of your RRSP. So for example you intend to withdraw money out of your account on November 15, 2024. To accomplish that, you could not have owned a house since a minimum of January 1, 2020—that is almost five years.
You could also be wondering what about couples who’ve separated and aren’t any longer living together. Previously, there have been no exceptions to the four-year rule above. Under the brand new rules introduced in 2019, an individual can once more qualify as a first-time buyer under the next conditions:
- You have been separated out of your spouse or partner for a minimum of 90 days.
- You don’t live in a house owned by a brand new partner or spouse on the time of withdrawal.
That’s not all. To use this system a second time, you could have fully repaid your previous HBP balance before January 1 of the 12 months of your next RRSP withdrawal. Depending on how much you withdrew, it could be difficult to repay the total amount in time.
