What do first-time homebuyers get in BC?

First-time buyers in BC do get help, but not in the form most people imagine. There is no cheque from the government. What exists is a set of tax exemptions, tax-sheltered savings and credits, each with its own conditions, each run by a different level of government. Some are worth a lot to the right buyer and nothing to the wrong one. Here is what they are and where to read the current rules, because every one of them has changed in recent years.

The provincial Property Transfer Tax exemption

The biggest one for many buyers is the First Time Home Buyers' Program, which can reduce or eliminate the Property Transfer Tax on a qualifying purchase. It has conditions on you, such as residency, citizenship or permanent residency and never having owned a principal residence anywhere in the world, and conditions on the property, including its value and how you will use it.

The value limits and the amount of the exemption are set by the province and have been adjusted over time. Read the current version on gov.bc.ca. There is also a separate exemption for newly built homes with its own rules. Your lawyer or notary claims the exemption when the transfer is registered, so tell them early that you believe you qualify.

The First Home Savings Account

The First Home Savings Account, or FHSA, is a federal registered account. Contributions can be deducted from your income, and qualifying withdrawals to buy a first home come out tax-free. It has an annual limit, a lifetime limit and a time limit on how long the account can stay open.

The point most people miss is timing. The account helps the most when it is opened early, because contribution room only starts once it exists. The Canada Revenue Agency publishes the rules. Your bank or financial planner can tell you how it fits your situation.

The Home Buyers' Plan

The Home Buyers' Plan lets a first-time buyer withdraw from their RRSP to buy a home, without paying tax on the withdrawal at that time, and then repay it into the RRSP over a set number of years. It has a withdrawal limit and a repayment schedule. Miss a repayment and that amount is added to your income.

It can be combined with the FHSA under the current rules, which is why a buyer with both accounts should look at them together. Again, the CRA page is the source, and an accountant or planner is the right person for whether it suits you.

Federal tax credit and GST on new homes

There is a federal first-time home buyers' tax credit, claimed on your income tax return for the year you buy. And if you are buying a new home, GST rebates may apply, including measures aimed at first-time buyers. The CRA publishes the eligibility rules for each. Do not assume the rebate is included in a presale price. Read the contract and ask the developer and your lawyer how GST is handled.

Mortgage rules for first-time buyers

Some mortgage rules treat first-time buyers differently, for example on the amortisation available on an insured mortgage. These are federal rules, they have changed recently, and the right person to explain how they apply to your file is your lender or mortgage broker.

How I handle this with first-time buyers

The first time I sit down with a first-time buyer, I ask three questions: have you ever owned a home anywhere, including outside Canada; do you have an FHSA or an RRSP, and since when; and are you looking at new construction or resale. The answers decide which programs are even on the table.

Then I send them to the source pages and to their lender and accountant with a short list of questions. It is not my job to tell anyone which program to use. It is my job to make sure nobody finds out about one after they have already completed the purchase, when it is too late to claim.

General educational content, verify property-specific details and consult qualified professionals when appropriate.

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