Government Incentives for First Time Buyers of Toronto Condominium Listings
Down Payment
First time Toronto Condominium buyers are allowed to purchase a home with as little as 5% down payment. The mortgage has to be insured against default by either CMHC or Genworth Financial. They both have income and debt requirements you will need to satisfy. The cost of the insurance is added to the mortgage and paid for in your regular monthly payment. A conventional mortgage is also available, where no insurance is required with a 20% down payment.
RRSP Home Buyers Plan
Provided you have the funds in your RRSP you are allowed to borrow up to $25,000 from the fund to help in the purchase of your first home. There is no tax penalty for the withdrawal but the loan does have to be repaid to your RRSP over a period of 15 years.In any year the loan is not repaid that amount becomes taxable. Any money withdrawn has to have been in your RRSP for a minimum of 90 days before it can be used without attracting any tax. Some forward planning on your part could help you save money on your taxes and use the funds towards your first home purchase.
GST Rebates
Resale homes are not subject to GST in Ontario. A new housing GST rebate is available to anyone purchasing a new Toronto home or new Toronto condominium in Ontario. The rebate is usually assigned to the builder by the buyer at the time of purchase and the builder subsequently sells the property GST included. The rebates are 36% of the original 5% GST on homes priced up to $450,000 before GST. Homes priced above $450,000 are not eligible for the rebate. The rebate is only available for new homes and condos to be used as a principal residence.
Harmonized Sales Tax
Under the new Ontario Harmonized Sales Tax, new homes sold at less than $400,000 will qualify for a 6% tax rebate.
Land Transfer Tax
Land Transfer Tax is a tax set up by the Provincial Government of Ontario and is paid by the buyer in every real estate transaction in Ontario. This would ordinarily be your largest expense in a home purchase, however as a first time Toronto condominium buyer you will be eligible for a rebate of up to $2000.00, an amount payable on a purchase price of $227,500.00. Any amount above this would be subject to the tax according to the rates as follows :
up to $55,000 X 0.5%
$55,000 to $250,000 X 1%
$250,000 to $400,000 X 1.5%
$400,000 and up 2%
City of Toronto Land Transfer Tax
This is an additional tax levied by the City of Toronto. As a first time Toronto condominium buyer you are exempt from this tax up to a purchase price of $400,000. Above that or as a second time home buyer or more you will be subject to the tax at the following rates :
up to $55,000 X 0.5%
$55,000 to $250,000 X 1%
$250,000 to $400,000 X 1.5%
$400,000 and up X 2%
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