Governments offer a range of tax benefits and financial incentives to encourage access to property. They make a big difference to the budget of future owners.
For example, the federal and provincial tax credits for the purchase of a first home, taking into account the rebate, can amount to $1,500 at the federal level and $1,252.50 at the provincial level. You therefore benefit from a total grant of $2,752 (Credits 2023), which is not tied to the value of your property.
On the other hand, buyers of new properties have to pay sales taxes. However, you are entitled to a partial GST/HST refund equal to 36% of the GST and 50% of the QST, up to a cap of $6,300 for the GST and $9,975 for the QST. The amount gradually decreases depending on the initial cost of more than $350,000 for GST and $200,000 for QST. It will be canceled if the price reaches or exceeds $450,000 for GST and $300,000 for QST.
Attraction
The First Time Home Buyer Incentive allows first time buyers to add an amount to their initial down payment that can be between 5% and 10% of the purchase price if your family income must be $120,000 or less and you earn a minimum down payment of 5% ( other criteria apply).
The incentive is similar to a second mortgage loan. The first mortgage loan (that of the bank) must be more than 80% of the value of the property and be subject to mortgage loan insurance.
rap
The Home Ownership Plan (RAP) is a program that allows you to withdraw amounts from your RRSP (Registered Retirement Savings Plan) to purchase a property, up to a maximum of $35,000, without paying taxes (if If you are purchasing with your spouse, your spouse can also contribute RAP up to $35,000.
You then have 15 years to repay your RRSP interest-free. The RAP is intended for first-time home buyers only.
You can withdraw your funds by contacting the issuer of your RRSP account. Repayment begins 61 days after the start of the second year following the year in which you withdrew your money from your RRSP. Example: Your payment will be made in December 2024, you can start repayment in February 2026. If paid out on January 3, 2024, the first repayment can be made in February 2027.
CELIAPP
The Tax-Free First-Time Home Buyer Savings Account (TFSA) is a type of real estate TFSA. You can open a CELIAPP account (or manage it yourself) with a financial institution, an online broker or with Épargne Placement Québec.
You can contribute tax-free up to an annual maximum of $8,000 for a lifetime cap of $40,000. If you contribute the maximum amount every year, it will take five years to reach the maximum limit. Just like with an RRSP and a TFSA, if you don't contribute the annual maximum allowable, you'll accumulate unused contribution room. The following year, you can make up this deficit by contributing more than the annual limit of $8,000.
What does $8,000 mean? That's $307.70 per paycheck (every two weeks). It's up to you to determine the amount of savings you want to achieve.
Advice
- To receive the GST/HST rebate for new housing, you must submit a rebate application to Revenu Québec no later than two years from the day you go to the notary.
- A good way to check whether you qualify for the first-time buyer incentive is to have your prospective lender do the calculations or use the online calculator: bit.ly/46bWdEI.
- The APCHQ offers a sales tax calculator for new buildings: apchq.com/outil-pratiques/calculatrice-de-taxes.