irst time homebuyers now qualify for expanded incentives on purchases up to $835,000. The province of BC has just made it significantly easier for you to get onto the property ladder.
$8,000 Property Transfer tax or PTT will be waived on purchases up to $835,000. This reduces the largest and most strenuous closing cost, which can’t be worked into your mortgage, and is due in full upon completion.
PTT is calculated as 1% on the first $200,000 and 2% on the balance. Note the purchaser will only be exempt from property transfer tax on the first $500,000 of the purchase price of the property, but can qualify for this exemption on purchases up to $835,000.
The maximum savings amount is $8,000.
If you purchased a $700,000 home you would only pay $4,000 in PTT, after the credit of $8,000 on the first $500k.
And on a $600,000 purchase you would only pay $2,000 in PTT, after the credit of $8,000 on the first $500k.
There’s a few other eligibility components, but the exemption applies in most cases.
This is a big jump from the previous threshold of $500,000, which was challenging as finding a home for $500k in any metro area is slim.
It is estimated around 15,000 people will benefit from the new First Time Homebuyer's Program thresholds this year.
Separate from the provincial PTT waiver, is a Federal Government's program that provides down payment assistance.
The Federal First-Time Home Buyer Incentive is a shared-equity mortgage with the Government of Canada, which offers:
The shared equity component of the incentive means that the government shares in both the upside and downside of the property value, up to a maximum gain or loss equal to 8% per annum (not compounded) on the Incentive amount from the date of advance to the time of repayment.
The homebuyer will have to repay the Incentive based on the market value of the home at the time of repayment equal to the percentage (for example, 5% or 10%) of the original home value used to determine the Incentive, up to a maximum repayment amount equal to:
(i) where the home’s value has appreciated, the Incentive plus a maximum gain of 8% per annum (not compounded) on the Incentive amount from the date of advance to the time of repayment; or
(ii) where the home’s value has depreciated, the Incentive minus a maximum loss of 8% per annum (not compounded) on the Incentive amount from the date of advance to the time of repayment.
The homebuyer must repay the Incentive after 25 years, or when the property is sold, whichever comes first. The homebuyer can also repay the Incentive in full any time before, without a pre-payment penalty
First-time homebuyers purchasing a home in the Toronto, Vancouver, or Victoria Census Metropolitan Areas are now eligible for an increased Qualifying Annual Income of $150,000 instead of $120,000, and an increased total borrowing amount of 4.5 instead of 4.0 times their qualifying income.
As always, 8X Real Estate is here to help advise and find you the perfect home.
Dustin Miller is the managing broker of 8X Real Estate. When he's not on the road, he is on his computer looking at real estate. You can often find Dustin at his office enjoying a bowl of won-ton soup.
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