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Government of Canada Programs to Support First Time Home Buyers

There has never been a better time to become a first time home buyer in Canada. The Government of Canada has introduced several programs to support homebuyers and encourage people to enter the real estate market. Despite the new changes in the Canada Mortgage and Housing Corporation’s mortgage rules, there are still special programs in place for first time home buyers that provide Canadians with incentive to get into the real estate market. As part of the Home Buyers’ Plan, the federal government allows Canadian citizens to borrow up to twenty five thousand dollars from their Registered Retirement Savings Plan tax free to fund the purchase of a new home. Those eligible for the Home Buyers’ Plan will have up to fifteen years to repay the amount borrowed.
The government of Canada also offers two credits to people who have purchased their first home. The Home Buyer’s Tax Credit, which can be claimed on your annual tax return, is based on the amount of five thousand dollars and can yield a tax credit of up to seven hundred and fifty dollars. The Canadian government also offers a Land Transfer Tax Refund, which was recently doubled from two thousand dollars to four thousand dollars, which provides further support to offset the costs of buying a new home.
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How the Home Buyers’ Plan Works
The home buyers’ plan is a government of Canada initiative aimed at helping first time home buyers fund the purchase of a new home. This program allows participants to withdraw up to $25,000 from their registered retirement savings plan (RRSP) to buy or build a qualifying home. In order to withdraw your funds from your RRSPs under the Home Buyer’s Plan, applicants must fill out Form T0136, Home Buyer’s Plan (HBP) Request to Withdraw Funds from an RRSP. 


Once you participate in the Home Buyer’s Plan, your RRSP deduction may also be affected. Certain rules apply that limit the deduction of your RRSP contributions made during the 89-day period before you withdrew your funds. These rules may prohibit a person from deducting part of all of the contributions made during this period for any year. During that period, a participant may not deduct the amount by which the total contribution to an RRSP is more than the fair market value of that RRSP after the withdrawal.


The Government of Canada has programs to support first time homeowners. Speak to an experienced REALTOR® today to get the information you desire to help fund your future purchase.