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First Time Home Buyers Tax Break
Megan Whelan
Megan Whelan
Megan Whelan
Megan is a graduate of Ingersoll District Collegiate Institute. She attended the University of Guelph for her undergraduate degree and obtained her J.D. at the University of Windsor. Megan currently resides in Norfolk County and has been spending her summers in Long Point for over 20 years.

It’s spring, and the housing market is about to get busy! Many homebuyers focus solely on the listing price of a house and forget all of the hidden fees behind buying a house, including the Ontario land transfer tax.

When you buy land in Ontario, you pay land transfer tax. The tax is a percentage of the purchase price. This tax can be pricy and substantially increase the amount you ‘thought’ you were paying for your house.

For years, the government has been providing a tax break on land transfer tax for first-time home buyers in hopes of making it easier for young families to purchase their first home. As of January 2017, the First-Time Home Buyers Land Transfer Tax Refund was increased from $2,000 to $4,000. This means that no land transfer tax is payable by first-time home buyers on homes up to $368,000 and any home above $368,000 will receive a maximum refund of $4,000.

The catch is that the refund is reduced if one or more of the purchasers is not a first-time home buyer. For example, if a first-time home buyer is purchasing a house with their parent who is not a first-time home buyer and each are acquiring a 50% interest in the home, the child cannot exceed 50% of the refund, now being $2,000.

It can get even more complicated if a first-time home buyer is purchasing a house with their spouse who is not a first-time home buyer. Again, the refund for the first-time home buyer is proportionate to the interest they receive in the home. However, if your spouse owned a home while you were married, or while you were co-habiting for more than 3 years, you forfeit your first-time home buyer’s exemption.

Now, you also cannot just assume that you will qualify for the rebate if you are a first-time home buyer. Among other requirements, you must be at least 18 years old, you must be a Canadian citizen or permanent resident, you must move into the home as your permanent residence within 9 months of taking ownership and you must have never owned a home, or had an interest in a home, anywhere in the world, not just Canada!

The home itself must also qualify as an “eligible home.” The most common eligible home is simply a detached home. However, there are other homes under the definition as well including condominiums and mobile homes.

The first-time home buyer’s exemption is definitely a huge help to first-time home buyers, as long as you meet all the requirements.

Megan Whelan is an associate at the law firm of Cobb & Jones LLP. For more articles, visit the Library page at www.cobbjones.ca.

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