BC First Time Home Buyer Programs (Updated 2024!)
Programs & Exemptions for First Time Buyers in BC
Written By: Mariko Baerg, REALTOR of Bridgewell Real Estate Group
If you’re looking for a realtor to help you purchase a property, call me today!
As a first-time homebuyer, you’ll want to be familiar with various first time home buyer programs that apply to your situation.
The government has a number of programs in BC that offer additional funding or cost exemptions to make your home buying process more affordable.
While not all of these first time home buyer programs work for everyone, there’s information you need to know to navigate the buying process and potentially save yourself some money along the way.
Keep reading for some of the key first time home buyer programs and options that you’ll want to be aware of!
RRSP Home Buyer’s Plan
The Home Buyers’ Plan (HBP) is a program that allows you to withdraw up to $60,000 tax-free in a calendar year from your registered retirement savings plans (RRSPs) to fund your down payment for buying or building a qualifying home for yourself or for a related person with a disability. The money must be in your RRSP for at least 90 days before the purchase of your house for it to be valid.
The Home Buyer’s Plan is advantageous for Canadians because generally speaking, early withdrawals from RRSPs are considered taxable income. In this case, they’re exempt but you must start repaying the amount borrowed from the RRSP five years after you buy over a 15-year period.
Here are more details of the RRSP Home Buyer’s Plan.
First Time Home Buyers Program: Property Transfer Tax Exemption
The property transfer tax cost is as follows:
1% on the 1st $200,000
2% on the balance up to $2,000,000
3% on the balance above $2,000,000
If you are a first time home buyer that is planning on using the home as your primary residence and purchasing a home for less than $835,000 then you may be eligible for a full exemption. There are also partial exemptions up to $860,000. To qualify for a full exemption, at the time the property is registered you must:
- be a Canadian citizen or permanent resident
- have lived in B.C. for 12 consecutive months immediately before the date you register the property or filed at least 2 income tax returns as a B.C. resident in the last 6 years
- have never owned an interest in a principal residence anywhere in the world at any time
- have never received a first time home buyers’ exemption or refund
Here are more details for the Property Transfer Tax exemptions for first time home buyers.
First Time Home Buyer’s Tax Credit
This credit allows first-time buyers in Canada the opportunity to recover some of the costs associated with their purchase. It helps offset legal fees, inspections, and other similar closing costs.
The First-time Home Buyer’s Tax Credit is a non-refundable credit of $10,000, which equates to a maximum tax rebate of $1500 as of 2023 ($750 until the 2022 budget was approved).
Here are more details for the First Time Home Buyer’s Tax credit.
GST New Housing Rebate
For newly built homes, first time home buyers are able to apply for a GST credit from the government and/or the developer. The GST in BC is equal to 5%, and as a home buyer you may be eligible for a rebate of 36% of the 5% GST. There is a full general rebate for homes that are under $350,000 that a buyer intends on living is an his/her permanent residence, and there are partial rebates up to $450,000.
Let’s brush up our math skills for a little example:
Assume the purchase price of a new home is $350,000 excluding G.S.T. The gross G.S.T. is $17,500 (5% of $350,000). The G.S.T. New Housing Rebate is 36% of $17,500 (5% GST), which is $6,300. Thus, the applicable G.S.T. is $17,500 (5%) less $6,300 (36% of 5% on $350,000), which equals $11,200. (GST payable after rebates)
For homes valued between $350,000.00 and $450,000.00, the rebate is gradually reduced and is calculated by using the following formula (get ready to brush up on your high school math):
$6,300 x [$450,000 – the purchase price] / $100,000
For example, assume the purchase price of a new home is $400,000 excluding G.S.T. The G.S.T. New Housing Rebate is
$6,300 x [$450,000 – $400,000.00] / $100,000
which equals $3,150. The gross G.S.T. would be 5% of $400,000.00, which equals $20,000.00, less the partial G.S.T. New Housing Rebate of $3,150.00, for a net tax of $16,850.00.
Here are more details of the GST New Housing Rebate.
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Interested in purchasing your first home in the Greater Vancouver or Fraser Valley and utilizing one or more of the first time home buyer programs?
Bridgewell Real Estate Group specializes in first time home buyers, and are well aware of the programs and options available that are specific to first time buyers!
Call/text us at 604-319-0200 or email [email protected] to start a conversation with a realtor today.
