New First-Time Buyer Incentives

Our take on the First-time Buyer Incentives

The new incentives are a step in the right direction for sure. For first time buyers that were close to being able to afford a home, the new incentives may be just enough to get them over the hump.

In the Toronto area where homes are so out of reach for so many, it may not help. The incentives will help those living in smaller communities for sure, but we don’t believe that they will have a big impact in Toronto. Here’s what the gov’t announced. Let’s break it down.

Maximum withdrawal from RRSP’s increased by $10,000

This allows up to $35,000 withdrawal under the Home Buyer Plan (HBP) tax-free, effective immediately. The new limit would apply to HBP withdrawals made after March 19, 2019. The repayment timeline remains the same (15 years to avoid full ordinary income taxation on your HBP withdrawals.

This is great for first-time buyers that actually have an RRSP of $35,000 or more. Many of our first-time buyer clients aren’t anywhere near the current maximum. So raising a maximum when they haven’t reached the previous maximum does really help. For a first time homeowner who has stashed away more than $35,000 in their RRSP the extra $10,000 withdrawal is great.

The CMCH First Time Homebuyer Incentive

CMCH has announced an awesome loan for first-time buyers that meet their criteria. Their criteria are that you must be a household that earns under $120,000 and make a purchase less than $500,000. If you meet this criterion, CMCH will provide you with a loan of 5% of the purchase price of a resale home and 10% on a new home. The loan will most likely have to be repaid on the sale of the home. Details of repayment are vague and will be rolled out later

This again will have the biggest impact on locations outside of Toronto where the average price for a home is under the $500,000 mark. In Toronto, there still are a select few condos under the $500,000 mark however the pickings are slim.

So there you have it new incentives for first-time buyers. The winners are those that in excess of $35,000 in an RRSP, earn less than $120,000 in combined income and are looking to buy a home under $500,000. It doesn’t apply to all but for those they do, take it and run.