RRSP Home Buyers' Plan Program

The Home Buyers' Plan (HBP) is a program under which you can, generally, withdraw up to $20,000 from your registered retirement savings plan (RRSPs) to buy or build a qualifying home. Withdrawals that meet all applicable HBP conditions do not have to be included in your income, and your RRSP issuer will not withhold tax on these amounts. However, before you can withdraw funds you must have entered into a written agreement to buy or build a qualifying home which you must occupy no later than one year after buying or building the home.

If you buy the qualifying home together with your spouse or other individuals, each of you can withdraw up to $20,000. You cannot withdraw an amount from your RRSP under the HBP if you or your spouse owned the home more than 30 days before the date of your withdrawal.

Details

• Up to $20,000 per person could be withdrawn tax-free from RRSPs to buy or build a principalresidence. Couples —including common-law — will be able to withdraw up to $40,000.
• You have to meet the first-time buyer's condition. You are not considered a first-time homebuyer if you or your spouse owned a home that you occupied as your principal place of residence in the past 5 years. To determine past 5 years, the 4 years preceding the year you make your withdrawal plus the period in the year you make your withdrawal ending 31 days before your withdrawal is the rule adopted.
• Home buyers withdrawing funds do not have to pay income tax on the amount withdrawn, as long as the funds are repaid into an RRSP in the future.
• The 15-year repayment period will begin in the second calendar year following the calendar year in which the withdrawal is made. In addition, a qualifying home must generally be acquired before October 1 of the calendar year following the year of withdrawal. For example, those making withdrawals under the plan in 2000 will have until October 1, 2001 to acquire a qualifying home and their first annual repayment will be due by the end of 2002 or the first two months of 2003.
• A special rule denies a tax deduction for contributions to an RRSP that are withdrawn within 90 days of the RRSP deposit being made. Consequently, to get the normal tax break for a contribution and to use those funds under the plan, the money must be in your RRSP for at least 90 days before a withdrawal is made. Existing homeowners can use the HBP to purchase a more accessible home or a home for a disabled dependent relative where the individual withdrawing the funds:
• Qualifies for the disability tax credit (DTC) and is buying a home that is more accessible for the individual or is better suited for the care of the individual.
• Is related to a disabled individual who qualifies for the DTC and is buying a home for the benefit of the disabled individual that is more accessible for, or better suited for, the care of the disabled individual.
• Is related to a disabled individual who qualifies for the DTC and is withdrawing an amount for the disabled individual to buy a home that is more accessible for, or better suited for, the care of the disabled individual.

You can participate in the HBP more than once if:

1. Your HBP balance for your previous participation is zero on January 1st of the year you want your new participation in the HBP to occur
2. You meet the first-time buyer's condition and all other HBP conditions that apply to your situation.

Land Transfer Tax (LTT) Rebate Program

First-time home buyers who purchase a newly constructed home will receive a rebate of the Land Transfer Tax (LTT). All other buyers will continue to pay the full applicable tax. The maximum LTT rebate is $2,000.

Details

• The 1996 Ontario Budget announced a special one-year provision to the LTT that was renewed every year and is now a permanent program.
•  First time buyers who purchase a newly constructed home will receive a rebate of the LTT. All other buyers will continue to pay the full applicable tax.
• The maximum rebate is $2000. If an individual owns less than 100% interest in the newly built home, the amount of the rebate would be reduced and calculated according to the amount of interest in the home.
• A rebate of $2,000 is equivalent to the LTT payable on a purchase price of $227,500 (net of HST).
• Only individuals who are at least 18 years of age, have not previously owned an interest in a home anywhere qualify for the rebate. Also applies to their spouse.
• Individuals who have received an Ontario Home Ownership Savings Plan (OHOSP) based refund of the LTT do not qualify.
• A real estate transfer tax is assessed on real property when ownership of the property is transferred from one party to another. The tax is a percentage of the value of the property based on a graduated scale:
• 0.5% on amounts up to and including $55,000
• +1.0% on the amount exceeding $55,000 up to and including $250,000
• +1.5% on amounts above $250,000 up to and including $400,000 for residential / +1.5% on the amount in excess of $250,000 for business properties
• +2.0% of the amount in excess of $400,000 [residential only]

For more information call the Ontario Finance Ministry at 1-800-263-7965.

These four portions added up together total the LTT payable. A simple formula is as follows:

**Purchase Price                                       Calculation of LTT 

  $0 to $55,000                                          0.5% x purchase price

$55,001 to $250,000                                 (1% x purchase price) minus 275

$250,001 to $400,000 (residential)          (1.5% x purchase price) minus 1525

$250,001 plus (business)                 

$400,001 plus (residential only)               (0.2% x purchase price) minus 3525

**If the purchase price falls within this range, then apply the appropriate formula to the purchase price. For example on a $200,000 property, the LTT calculation would be [(1% x $200,000) minus 275 = $1725].

Peel Affordable Ownership Program

What is the Home in Peel Affordable Ownership Program?

The Home in Peel Affordable Ownership Program is designed to provide low-to-moderate income residents who are currently renting a unit in the Region of Peel (Brampton, Caledon or Mississauga) the opportunity to qualify for down payment loan assistance to buy a home in Peel Region.

This program will assist eligible applicants who have a total gross (pre-tax) household income of $80,000 or less to purchase a resale home in the Region of Peel that does not exceed a purchase price of $295,000.

Participant Eligibility

• Applicants must be 18 years of age or older
• Applicants must be a Canadian citizen or have permanent resident status
• Applicants must not own or have an interest in another residential property in Canada or elsewhere
• The home must be the sole and principal residence of the purchaser
• The applicant must currently be renting in Peel and looking to buy a sole and principal residence
• The applicant must have a total gross (pre-tax) household income not exceeding $80,000
• The applicant must be able to obtain a mortgage pre-approval from a bank/lender that is approved and insured by a mortgage default insurer such as Canada Mortgage and Housing Corporation (CMHC) and must submit it with their application
• Participants may not include anticipated rental income from a portion of the property in order to obtain a mortgage
• The applicant must be able to pay all additional closing costs
• The applicant must supply all necessary documentation to the Region of Peel within the required timeframe

Eligible Homes

Due to unpredictability of closing dates, new homes will not be eligible for purchase under the program.

Participants may purchase:

• resale detached homes
• semi-detached
• row homes
• town (condominium or freehold) stacked homes
• high-rise condominium units

Duplex, triplex or mobile homes do not qualify as eligible homes under the Home in Peel program.

The maximum house price for program participants in the Region of Peel is $295,000.

 The Down Payment Loan

Approved applicants are eligible for $15,000 of down payment assistance.

Repaying the Loan

The loan is for a 20-year period and no interest is charged if:

• The home remains the sole and principal residence of the owner. The home is not rented, leased or sold in the 20-year period.
• On the 20th anniversary date of the agreement, the loan is automatically forgiven provided there has been no default.

Repayment of the loan is required when:

• The home ceases to become the sole and principal residence of the owner.
• The home is sold before the 20-year period.

If during the 20 year affordability period, the property is resold, transferred, or otherwise disposed, and an appreciation in value is incurred, the purchaser will be required to pay back to the Region of Peel the loan and 5% of the appreciation.

If the home is sold for less than the original purchase price, the principal is forgiven; however, the sale must be at fair market value and must be an arm's length transaction (meaning the property cannot be sold to a relative).

Other Costs for the Purchaser

The purchaser should be aware that they are required to pay additional closing costs that includes, but is not limited to the following:

• Deposit
• Home inspection fee
• Lawyer's fees
• Land Transfer Tax

What is Needed to Qualify for the Home in Peel Program?

Interested applicants must complete the application form and provide all supporting documentation and return it to the Region of Peel within the required timeframe.

As funding for this program is limited, participants are selected on a first-come, first-serve basis. Once an application is received, a letter confirming eligibility will be sent within 30 business days. There is no wait list for this program; once all funding has been allocated, all remaining applicants will be notified by letter that the program has ended.

Eligible homes in Peel Region

• Resale homes up to $295,000.
• Homes may be detached, semi-detached, town (condominium and freehold), stacked homes, row houses or high-rise condominium units.
• Homes must be the sole and principal residence of the purchaser(s).
• Homes are to be for single families only.
• Duplex, triplex and mobile homes do not qualify under this program and purchasers may not use an anticipated rental income from a portion of the property in order to obtain mortgage financing.

*Guarantors or co-signers are not allowed under this program.

Map of Peel

Peel Region includes Brampton, Caledon and Mississauga.

View a Map of Peel Region and surrounding area.

Real Estate Resources

Find a home for sale in your area:

• Brampton Real Estate Board
• Mississauga Real Estate Board
• Canadian Real Estate Association
• Multiple Listing Service

Responsibilities of Purchaser

As a home purchaser, there are various responsibilities when buying your first home:

• Home inspection costs
• Closing costs
• Conditional approvals process
• Repayment of loan by purchaser

 HOME INSPECTION COSTS

• As part of the program, a purchaser must conduct a home inspection on the prospective home as a condition of the closing of the transaction. It is in the best interest of the purchaser to have an inspection completed and to be aware of all of the possible concerns and issues, including ones that may be hidden to the eye.
• On average, a home inspection usually ranges in price between $200 to $400. This cost is the sole responsibility of the purchaser.

CLOSING COSTS

• Purchasers under the Affordable Ownership Program should be aware of, and be able to pay for, any additional closing costs incurred during the purchase of a home.
• Closing costs include: the deposit, home inspection fee, lawyer's fees, land transfer costs, title search costs, possible land and/or municipal property tax payments, and any other unanticipated costs. These are all the sole financial responsibility of the purchaser. It is important that the purchaser have extra money available for these costs.

CONDITIONAL APPROVALS PROCESS

• The conditional approval letter given to eligible purchasers by the Region of Peel during the approval process is a conditional approval only until final first mortgage insurance under-writing review is conducted and approved.

If denial by the lender is received at the final under-writing stage of the home purchasing process, the Region of Peel will not be responsible for any costs, losses or liabilities that are or may be incurred by the individual purchaser. The purchaser would no longer be eligible for participation in the Home in Peel Affordable Ownership Program, and as a result, would not receive the down payment loan assistance.

REPAYMENT OF LOAN BY PURCHASER

• If a home that is purchased under this program is sold within the first 20 years of ownership by the purchaser then the down payment loan is to be repaid to the Region of Peel plus 5% of the appreciation.