Start with the two down-payment accounts
A First Home Savings Account can provide tax-deductible contributions and a tax-free qualifying withdrawal. Current participation room begins at $8,000 in the year the first FHSA is opened, subject to a $40,000 lifetime contribution limit and carry-forward rules.
The RRSP Home Buyers’ Plan currently allows an eligible buyer to withdraw up to $60,000. An eligible buyer may use an FHSA qualifying withdrawal and an HBP withdrawal for the same home when every condition for both programs is met.
- FHSA: confirm available room before contributing or transferring funds
- HBP: confirm the withdrawal timing and future repayment obligation
- Couples: calculate each eligible buyer’s available room separately
- Keep the offer deposit, completion funds and emergency reserve separate in the plan
Separate the tax credit, GST rebate and property transfer tax
The federal Home Buyers’ Amount is a non-refundable tax credit. An eligible buyer can currently claim up to $10,000, producing up to $1,500 in federal tax relief at the lowest federal rate.
For an eligible newly built or substantially renovated principal residence, the federal first-time home buyers’ GST/HST rebate can recover up to $50,000. The full rebate applies at or below $1 million, phases out between $1 million and $1.5 million, and is unavailable at $1.5 million or above.
B.C.’s First Time Home Buyers’ Program is separate. It currently applies to qualifying properties valued at $835,000 or less, with a partial exemption above $835,000 and below $860,000. The full program exempts the tax on the first $500,000 rather than automatically eliminating every dollar of tax on an $835,000 purchase.
New homes may qualify for two different forms of relief
B.C.’s Newly Built Home Exemption can reduce or eliminate property transfer tax on a qualifying principal residence. The current full-exemption threshold is $1.1 million, with a partial exemption above $1.1 million and below $1.15 million.
This provincial exemption is not the federal GST rebate. The contract, purchase price, occupancy intention and application process should be reviewed before assuming either benefit will be available at completion.
Build the mortgage plan around the real cash requirement
For an owner-occupied one- or two-unit home with mortgage insurance, the standard minimum equity is generally 5% of the first $500,000 of lending value and 10% of the remainder. Insured financing is generally limited to homes priced below $1.5 million.
A maximum 30-year insured amortization may be available when at least one borrower is a first-time buyer or the property is newly built. The lower scheduled payment must be weighed against total interest and mortgage-insurance costs.
- Offer or presale deposit
- Remaining down payment at completion
- Property transfer tax after available exemptions
- Legal or notarial fees, inspection, appraisal and insurance
- Strata adjustments, moving costs and an emergency reserve
Why one eligibility test is not enough
The programs do not all define a first-time buyer the same way. Prior ownership, whether you lived in an owned home, a spouse or partner’s ownership, residency, citizenship or permanent-resident status, property value and intended occupancy can produce different answers.
William can organize the purchase strategy, property search, offer and due diligence. Tax, legal and mortgage eligibility should be confirmed by the professionals responsible for the specific transaction.