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First Time Home Buyers

 

 

 

 

THE FIRST TIME HOME BUYERS’ PROGRAM

 

 

BC Introduces Innovative New Program to Help First-Time Homebuyers

In a move to help BC citizens and residents buy their first home, the BC government announced today that it is launching a new program to augment down payments for first-time buyers. The B.C. Home Owner Mortgage and Equity Partnership program contributes to the amount first-time homebuyers have already saved for their down payment, providing up to $37,500, or up to 5% of the purchase price, with a 25-year loan that is interest-free and payment-free for the first five years. Through the program, the Province is investing about $703 million over the next three years to help an estimated 42,000 B.C. households enter the market for the first time.

During the first five years, no monthly interest or principal payments are required as long as the home remains the homebuyer’s principal residence. After the first five years, homebuyers begin making monthly payments at current interest rates. Homebuyers will repay the loan over the remaining 20 years, but may make extra payments or repay it in full at any time without penalty. The loan must be repaid in full when the home is sold or transferred to another owner.

To be eligible, buyers must be preapproved for an insured high-ratio first mortgage (mortgage down payment is less than 20% of the home price). On completion of the sale, program funds will be advanced and the loan will be registered as a second mortgage on the property’s title.1?

Applications will be accepted starting January 16, 2017. This will be a three-year program with loans advanced from February 15, 2017 until March 31, 2020.

Eligible homebuyers

All individuals with a registered interest on title must reside in the home and:

·         Be a first-time homebuyer

·         Have been a Canadian citizen or permanent resident for at least five years

·         Have resided in BC for at least 12 months

·         Have a combined gross income of $150,000 or less

·         Have saved at least half of the minimum down payment they will require

·         Must be pre-approved for the first mortgage before applying

The first mortgage must be high-ratio insured from an NHA approved lender for more than 80% of the purchase price.

Eligible Properties

Any legal, self-contained, mortgageable residence located in BC

·         Must be used as a principal residence for the first 5 years

·         Rental properties and seasonal or recreational properties are not eligible

·         The purchase price cannot exceed $750,000

Home Partnership Loans

·         Up to 25-year term, registered as a second mortgage

·         No interest or principal payments for the first 5 years

·         Monthly principal and interest payments begin in year 6, amortized over remaining 20 years

·         Interest rate for years 6 to 10 set near first mortgage rate at time mortgage is registered

·         Interest rate reset to near first mortgage rate at years 10, 15, and 20

·         Homeowner may repay in full or part at any time without penalty.

The loan is due and payable in full upon

·         The home ceasing to be the primary resident in the first 5 years

·         Default on the first mortgage

·         Sale of home or change of ownership

·         Any other default on the Home Partnership second mortgage

 

 

 

First Time Home Buyers' Program

The First Time Home Buyers' Program reduces or eliminates the amount of property transfer tax you pay when you purchase your first home. If you qualify for the program, you may be eligible for either a full or partial exemption from the tax.

If one or more of the purchasers don’t qualify, only the percentage of interest that the first time home buyer(s) have in the property is eligible.

For example, if you qualify and purchase a property with a fair market value of $400,000 with a person that doesn’t qualify you would still qualify. If you owned a 60% interest in the property, 60% of the tax amount would be eligible for the exemption.

Do I Qualify?

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

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You may qualify for a partial exemption from the tax if the property:

           Partial Exemption 

Find out the amount of your exemption if you qualify.

 

100% Eligible

Below is the amount of tax payable if 100% of the property transfer is eligible for the First Time Home Buyer's Exemption.

Fair Market Value Exemption Amount Tax Payable
Less than $500,000.00 Full amount of tax normally due $0
$500,000.00 $8,000.00 $0.00
$501,000.00 $7,699.20 $320.80
$502,000.00 $7,396.80 $643.20
$503,000.00 $7,092.80 $967.20
$504,000.00 $6,787.20 $1,292.80
$505,000.00 $6,480.00 $1,620.00
$506,000.00 $6,171.20 $1,948.80
$507,000.00 $5,860.80 $2,279.20
$508,000.00 $5,548.80 $2,611.20
$509,000.00 $5,235.20 $2,944.80
$510,000.00 $4,920.00 $3,280.00
$511,000.00 $4,603.20 $3,616.80
$512,000.00 $4,284.80 $3,955.20
$513,000.00 $3,964.80 $4,295.20
$514,000.00 $3,643.20 $4,636.80
$515,000.00 $3,320.00 $4,980.00
$516,000.00 $2,995.20 $5,324.80
$517,000.00 $2,668.80 $5,671.20
$518,000.00 $2,340.80 $6,019.20
$519,000.00 $2,011.20 $6,368.80
$520,000.00 $1,680.00 $6,720.00
$521,000.00 $1,347.20 $7,072.80
$522,000.00 $1,012.80 $7,427.20
$523,000.00 $676.80 $7,783.20
$524,000.00 $339.20 $8,140.80
$525,000.00 $0 $8,500.00

50% Eligible 

If only part of the property transfer is eligible (e.g. not all of the purchasers qualify), the exemption amount will be reduced. The amount of the exemption is reduced by the percentage of the property transfer that isn't eligible.

Below is the amount of tax payable if 50% of the property transfer is eligible for the First Time Home Buyer's Exemption.

 

Fair Market Value Exemption Amount Tax Payable
$500,000.00 $4,000.00 $4,000.00
$501,000.00 $3,849.60 $4,170.40
$502,000.00 $3,698.40 $4,341.60
$503,000.00 $3,546.40 $4,513.60
$504,000.00 $3,393.60 $4,686.40
$505,000.00 $3,240.00 $4,860.00
$506,000.00 $3,085.60 $5,034.40
$507,000.00 $2,930.40 $5,209.60
$508,000.00 $2,774.40 $5,385.60
$509,000.00 $2,617.60 $5,562.40
$510,000.00 $2,460.00 $5,740.00
$511,000.00 $2,301.60 $5,918.40
$512,000.00 $2,142.40 $6,097.60
$513,000.00 $1,982.40 $6,277.60
$514,000.00 $1,821.60 $6,458.40
$515,000.00 $1,660.00 $6,640.00
$516,000.00 $1,497.60 $6,822.40
$517,000.00 $1,334.40 $7,005.60
$518,000.00 $1,170.40 $7,189.60
$519,000.00 $1,005.60 $7,374.40
$520,000.00 $840.00 $7,560.00
$521,000.00 $673.60 $7,746.40
$522,000.00 $506.40 $7,933.60
$523,000.00 $338.40 $8,121.60
$524,000.00 $169.60 $8,310.40
$525,000.00 $0 $8,500.00

 

Apply

To apply for the First Time Home Buyers' Program you need to complete the First Time Home Buyers' Property Transfer Tax Return when you or your legal professional register the property transfer.

After you have applied you must meet additional requirements during the first year you own the property to keep the tax exemption.

Penalty for False Declaration

All applications are reviewed. You will be charged a penalty equal to double the tax if you falsely declare that:

  • you have never owned an interest in a principal residence anywhere in the world at any time, or
  • you have never received a first time home buyers' exemption or refund

First Year of Ownership

At the end of the first year you own the property you will receive a letter. The letter is to conditionally confirm that you meet the occupancy and property value requirements after you:

Existing Home

To keep the tax exemption you must have:

  • moved into your home within 92 days of the date the property was registered
  • continued to occupy the property as your principal residence for the remainder of the first year

You may keep part of the exemption if you moved out before the end of the first year.

If the owner passed away, or the property is transferred because of a separation agreement or a court order under the Family Law Act before the end of the first year, you still qualify to keep the tax exemption.

Built New Home

If you registered a vacant lot and built your own home, to keep the tax exemption:

  • the fair market value of the land when you registered the property plus the cost to build your home must be:
    • $500,000 or less if registered on or after February 19, 2014
  • you must have built and moved into your home within 1 year of the date the property was registered
  • you must have continued to occupy the property as your principal residence for the remainder of the first year

You may keep part of the exemption if you moved out before the end of the first year.

If the owner passed away, or the property is transferred because of a separation agreement or a court order under the Family Law Act before the end of the first year, you still qualify to keep the tax exemption.

 

 

Property Transfer Tax ( Property Purchase Tax)

 

The Property Purchase Tax in the Province of British Columbia is 1% of the first $ 200,000 and 2% of the balance for example if a property sells for $ 500,000 the buyer pays $ 8,000 in tax( $ 200,000 X 1% = $ 2000 + $ 300,000 X 2% =$ 6000 )however the First Time Home Buyers who buy properties under $ 425,000 might be qualified for total exemption and properties between $ 425,000 and $ 450,000 might be partially exempted ,

 

To qualify for the First Time Home Buyers' exemption you must meet all of the initial eligibility criteria. To retain the exemption, there are also requirements which must be met in the year following the transfer. For complete information on all of the eligibility criteria, please see:

To claim the exemption you must file a First Time Home Buyers' Property Transfer Tax Return (FIN 269) and the appropriate Land Title forms at the Land Title Office when you apply to register your property.

 

If you do not qualify at the time of registration, but you meet all the requirements by the first anniversary of the registration date, you can apply for a refund of the tax paid. Applications for refund must be made within 18 months of the registration date. Please see How to File for more information

 

 

Increasing Withdrawal Limits Under the Home Buyers’ Plan

Saving the down payment for a home can be a challenge for many first-time home buyers.

The Home Buyers’ Plan (HBP) allows first-time home buyers to withdraw up to $20,000 from a Registered Retirement Savings Plan (RRSP) to purchase or build a home. Unlike regular RRSP withdrawals, HBP withdrawals are not included in income when withdrawn. Amounts withdrawn under the HBP must be repaid over a 15-year period, starting the second year following the year of the withdrawal, or included in the individual’s income if not repaid.

To provide first-time home buyers with additional access to their RRSP savings to purchase or build a home, Budget 2009 proposes to increase the HBP withdrawal limit to $25,000 from $20,000 in respect of withdrawals made after January 27, 2009. It is also proposed that the increase apply to HBP withdrawals made for the purchase of a more accessible or functional home where the individual making the withdrawal is eligible for the Disability Tax Credit (DTC), or if the withdrawal is made for the benefit of a DTC-eligible person who is related to the individual making the withdrawal. This is the first increase in the withdrawal limit since the HBP was introduced in 1992.

With the $5,000 increase to the withdrawal limit, two first-time home buyers purchasing a home jointly (e.g. a married or common-law couple) with sufficient RRSP funds in each of their names may now together withdraw up to $50,000 from their RRSP funds toward the purchase of a home in Canada.

It is estimated that this measure will cost $15 million in each of 2009–10 and 2010–11.

 

 

 

 

 

 

 

 
   

BC Real Estate
PROPERTY TRANSFER TAX CALCULATOR

 

 

 

PTT (sometimes called PPT) is a sales tax charged by the BC Government on all transfers of Real Estate in BC.

  • First time homebuyers get a break on this tax. They pay $0 PTT on homes with a purchase price of $425,000 or less, but they pay full PTT on homes with a purchase price above $450,000.
  • Further Example: If two people buy a home together, and one is eligible for the First Time Home Buyers Special rate, and one isn't, then tax will be charged proportionately to their ownership share.
  • Homeowners who claim the First Time Homebuyers PTT Exemption must live in the home for at least one year after purchasing it.
  • All types of real estate pay the same PTT rate, whether the property is used, new, or vacant land.
  • The PTT rate is based on 1% of the first $200,000 of price, and 2% thereafter
    (except first time buyers below $450,000).
  • Homes are not charged PTT on the HST component of the price, for sales where HST or GST applies.
 
BC Real Estate Purchases
  Purchase Price
Property Transfer Tax Payable
 
First-Time Homeowners Special Rate
  Purchase Price
Property Transfer Tax Payable

 

The Calculator is not to be relied upon for making actual PTT calculations or determinations.

 

 

 

If  you have questions about buying your first home please email me:                      

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Phone      

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