When you become a first-time home buyer in Canada, there is much to consider. Your first mortgage will include a great deal of paperwork and tireless search to find the perfect home and the best mortgage rates for your budget needs. But the process also includes a nice incentive known as the land transfer tax rebate. This option allows first time home buyers to earn a rebate when owning land or interest in land located in Ontario. Learn more about this option below to see how you can take part.
Introduction to the Land Transfer Tax Rebate
To begin, you must understand the land transfer tax and rebate process. A land transfer tax is paid when you buy land or interest in land in Ontario. For first time home buyers, this is cause for a refund of all the amount paid or a partial amount, for an eligible home.
To be able to claim the refund, you must be 18 years of age or older and have never owned a home or interest in a home anywhere. The same applies to your spouse. With previous home ownership, you do not qualify for the refund.
The Land Transfer Tax refund amount can reach a maximum of $4,000. The goal is to help first time home buyers move out of their parents’ home or move out of an apartment and begin on the path to homeownership.
With new rates, a home that has a purchase price of up to $55,000 has a tax rate of .5%. $55,000 to $250,000 has a tax rate of 1% while $250,000 to $400,000 homes have a rate of 1.5%. Homes that cost $400,000 to $2 million have a 2% tax rate and $2 million homes and above have a rate of 2.5%.
When you are a first time home buyer in Ontario, you will be able to earn up to $4,000 in cash back based on the land transfer tax paid on the home. In general, the rebate will be applied for when you finalize the purchase of your new home. However, if this does not happen, you have 18 months from the date of sale registration to file for the rebate.
Similar programs are offered in other provinces to help first time home buyers earn rebates along with having access to additional incentives. It is important to consult with your mortgage broker on what programs are available to you so that you can take advantage of rebates, tax credits and more.
With our team at Mortgage Guys, we will assist you in finding out exactly what you need to know to save money on your first mortgage. Our lenders know how to find the best interest rates for your mortgage needs along with selecting a quality loan term for the lowest monthly mortgage payment. Rebates and programs are considered to help you find the best overall mortgage option for your first home purchase. Contact our office today to get started learning more about first time home buyer programs and incentives.