People often call our office asking if they qualify as a First Time Home Buyer. Simple question right? Not exactly.
Why are so many buyers, realtors and lenders confused by the definition of a 1st time homebuyer? The short answer is that there hasn’t been a consistent definition. The various bodies that make the rules, whether that be the Provincial Government, the Federal Government or CMHC (Canadian Housing and Mortgage Corporation), can’t seem to agree on what a 1st time home buyer is. Adding to the confusion is the fact that the rules change from time to time within each institution.
The good news is that we no longer have to worry about CMHC. Their lending criteria no longer takes into account one’s status as a first time home buyer. This leaves us with a Federal definition and a Provincial (BC) one. While our area of practice is mainly concerned with the BC Provincial Government’s PTT exemption, we’ll touch on CRA’s first.
The Canada Revenue Agency (CRA)
The Federal Government has two programs that deal with First Time Home Buyers. One is the Home Buyers Plan (HBP), which is a program that allows you to use your RRSPs to purchase or build a home. The other is called the First Time Home Buyer’s Tax Credit (HBTC), which allows for a $5000 tax deduction.
In a nutshell, CRA defines a First Time Home Buyer as someone who hasn’t owned a home in at least 4 years. ( as this is an oversimplification please refer to CRA’s website)
HBP – http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html
HBTC – http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhbtc-eng.html#q1
We won’t confuse you by attempting to fully explain these programs , but suffice to say that you may be considered a 1st time home buyer even if you have owned a principle residence before.
British Columbia (Property Transfer tax exemption for 1st Time Home Buyers)
In BC we have something called Property Transfer Tax or PTT. It is a tax payable at the time you purchase a home and is calculated as 1% on the 1st $200,000.00 of your purchase price and 2% on the remainder. So as an example, a house that costs $300,000.00 will attract $4,000.00 in PTT. The BC Provincial Government has created an exemption for First Time Home buyers. The definition in this case is more restrictive but nice and simple:
In BC, a First Time Home Buyer is someone who has not ever owned a principle residence anywhere. Unlike the CRA definition, it doesn’t matter if you owned your house 10 years ago in England or 7 years ago in Chilliwack. You are no longer a 1st timer for PTT exemption purposes if you have ever owned a house that was considered to be your principle residence.
The link below provides everything you need to know about claiming the PTT exemption. Please read the criteria carefully as there are other conditions to consider such as the size of property involved, maximum purchase price ($425,000.00 with a reduced benefit to $450,000.00), Citizenship / Permanent Residency and BC residency.
http://www.sbr.gov.bc.ca/documents_library/brochures/FirstTimeHomeBuyer.pdf
If you have any questions or would like us to confirm your eligibility for the PTT Exemption for First Time Home Buyers, please do not hesitate to contact us at Simpson Notaries.
