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Entering the B.C. real estate market is an exciting milestone, but first-time buyers often face high prices and competition. Luckily, both provincial and federal programs provide valuable support to make the process more manageable. Here’s a detailed look at the options available, who qualifies, and how each program benefits buyers.
Key Provincial Programs
1. B.C. First-Time Home Buyers’ Program for PTT
What It’s For: This program is designed to reduce or eliminate property transfer tax (PTT) for first-time buyers.
Who Qualifies: Canadian citizens or permanent residents who’ve lived in B.C. for 12 months or filed two recent B.C. tax returns. Buyers must be new homeowners using the property as their primary residence.
Benefits: A full exemption is available on properties up to $835,000. For homes valued between $835,000 and $860,000, buyers receive a partial exemption.
PTT Calculation: The general property transfer tax rate is: 1% of the fair market value up to and including $200,000. 2% of the fair market value greater than $200,000 and up to and including $2,000,000. 3% of the fair market value greater than $2,000,000.
(Example: For $835,000 property, you will save $14,700 of property transfer tax payable.)
2. B.C. Home Owner Grant for Property Taxes (Ongoing)
What It’s For: Provides ongoing property tax relief for all eligible homeowners.
Who Qualifies: Homeowners with properties valued below $2,125,000.
Benefits: Reduces property taxes annually by up to $770, offering sustained relief beyond the initial purchase.
(Note: This is only available for your primary residence. There is a basic home owner grant or seniors home owner grant that you will have to apply for every calendar year.)
3. Newly Built Homes Exemption (Pre-sale, New Construction)
What It’s For: This program reduces or waives the property transfer tax on newly constructed homes.
Who Qualifies: Buyers of new homes, such as new condos and townhomes, valued up to $1.1 million.
Benefits: Full exemption from the property transfer tax, easing upfront costs for those seeking new or significantly renovated homes.
Federal Programs
1. Home Buyers’ Plan (HBP)
What It’s For: Allows first-time buyers to access RRSP savings tax-free for down payments.
Who Qualifies: Canadian first-time buyers intending to use the property as a primary residence.
Benefits: Buyers can withdraw up to $60,000 tax-free from their RRSPs, with a 15-year repayment period, allowing for a substantial boost toward a down payment.
2. First Home Savings Account (FHSA)
What It’s For: Helps first-time buyers save for down payments with tax-free growth on contributions.
Who Qualifies: Canadian first-time buyers.
Benefits: Contribute up to $8,000 annually, with a lifetime limit of $40,000. Earnings from investments within the account grow tax-free, maximizing down payment savings.
3. First-Time Home Buyers’ Tax Credit
What It’s For: A one-time tax rebate that helps reduce the cost of homeownership in the first year.
Who Qualifies: Canadian first-time home buyers.
Benefits: Provides up to $1,500 in tax savings, offering some relief for closing costs and other initial expenses, upon filing a tax return in the following year. This credit can only be claimed if you have taxes payable.
Suggestions for First-Time Home Buyers in B.C.
Set a Realistic Budget: Review property prices in your preferred area to plan for a realistic price range.
Reduce Debt: Lower existing debts to help you qualify for a better mortgage rate and terms.
Start Saving Early: Consider opening an FHSA if eligible, and explore the HBP to leverage RRSP savings for your down payment.
Get Pre-Approved: A pre-approval not only provides you confidence and direction for your potential offer price, but also gives you a clear understanding of your budget.
Stay Informed on Market Trends: Market conditions fluctuate, so staying updated can help you make a strategic decision on when to buy. For Greater Vancouver Market Reports, click here.
Reach out to us anytime if you have any questions!
Xenia Egorov PREC* | 778-319-4546
Gloria Li 李美儀 | 778-938-6543 (粵語 Cantonese)
A.V. Sayson PREC* 史韶文 | 604-753-8062 (普通話 English/Filipino/Mandarin)
*Personal Real Estate Corporation
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