What to Know About First-Time Home Buyers Incentive
Buying your first house is one of the hugest steps you take in your lifetime. It takes a lot of time and effort to save up and find the right place for you and your loved ones.
But that's only one side of the problem. Today, buying a home can be pretty expensive in Canada, especially in big cities such as Vancouver. If you like following real estate news and trends, you're probably thinking that it’s almost impossible to become a homeowner in British Columbia.
Of course, there`s no denying that the Canadian housing market has been experiencing a surge during the last few years. And although prices have started to decrease over the past couple of months, they`re still quite difficult to afford for most.
Thus, in order to help citizens with the huge costs of house ownership, the government of British Columbia launched a program known as the first-time home buyer incentive.
But what is a first-time home buyer incentive, and how can you know if you're eligible for it? In this post, we`ll be discussing this program in depth, and you'll see how it can help you buy your dream house in BC. Stay tuned.
Vancouver real estate is the third least affordable metropolitan housing market after Hong Kong and Sydney
What Is First-Time Home Buyer Incentive?
Technically speaking, this first-time home buyer incentive program offers eligible home buyers in British Columbia a chance to reduce or even eliminate the amount of money paid for the property transfer tax.
But what is a property transfer tax? Well, similar to many countries, when purchasing a property in Canada that is already registered at the Land Title Office, you need to file a property transfer tax return and you have to pay a property transfer tax unless you prove to qualify for an exemption.
Note, this tax is estimated based on the fair market value of the property on the exact day when it was registered with the Land Title Office.
Am I Eligible for First-Time Home Buyer Incentive?
To be eligible for this ‘first-time’ home buyer program in BC, there are different factors that officials consider. Thus, before registering for this program, you must:
Be a Canadian citizen (or a permanent resident)
- Lived in the province of British Columbia for a minimum of a year before attempting to register the property, or filed 2 or more income tax returns as a resident in British Columbia
- during the last six taxation years before registration.
- Never used British Columbia`s first-time home buyers' exemption and refund
- Never bought and owned an interest in a house that was your main residence in any part of the world.
So that`s the qualification list you need to check before attempting this program. That said, even if you prove to be eligible, the property also must:
- Be used solely as your main residence
- Have a fair market value of around $500,000
- Be approximately 0.5 hectares or 1.24 acres
Now, this was for full exemption. However, even if you don`t qualify for an exemption, you may attempt a partial exemption from the tax if your property:
- has a fair market value of around $525,000 or less
- Is larger than 1.24 acres
How Can I Apply?
So are you qualified for the property tax-free program? Great, now the next step is to apply. Here, we recommend you hire a legal professional who can help you during the tedious process of application.
A legal professional can help you collect the documents and information needed and give you the advice necessary for a successful application.
After submitting your return, the first part is over. That said, even during the first year of owning the property, you need to meet the additional requirements to maintain the property tax-free eligibility. But what are these additional requirements? Let`s take a closer look.
If you have registered an existing house, you must:
- Move into your new house within three months of the date you have registered the property
- Occupy the house constantly as your permanent residence for at least up to the first anniversary of the registration
With these in mind, if the house owner passes away before the first anniversary, or the property is transferred to a second party due to a separation or a court order, you can still keep the tax exemption.
But if you have registered an empty lot and built the house yourself, the additional requirements include:
- The fair market value of the lot at registration plus the price of building the house should be $525,000 or less
- The house must have been built and moved into by the first registration date anniversary
- The house must be occupied as the permanent residence up to the first anniversary of the registration date
In case of separation or death of the homeowner, the same rules apply for these types of registered properties as well.
False Declaration and Penalty
All applications for the first-time home buyer incentive program are carefully reviewed by officials and those declaring false information will be charged with a penalty equal to double property transfer tax.
The false declarations include:
- Declaring you have never owned an interest in a permanent residence falsely
- Declaring you haven`t received a first-time home buyers' exemption or refund falsely
Living near the beautiful sceneries of the west coast is a dream shared by so many. However, the increasing costs of houses in Metro Vancouver and other big cities in this province have stopped many from buying their dream house.
But all hopes are not lost. Thanks to the multiple programs launched by the federal government and the government of BC, now the dream of moving into your own house is closer than ever.
First-time home buyer incentive is a program provided by BC officials to help the younger generation with the exceeding burden of buying a property. Founded by a team of professionals, Grayly is happy to guide you through your new home. Check out our website, and find your new house in British Columbia.