You may be aware of the Land Transfer Tax that both the province of Ontario and the City of Toronto apply to the purchase of real estate, but it seems many are not as clear on how the First Time Home Buyers Credit works. The FTHBC rebates a portion of the closing costs and is separate from the Land Transfer Rebate. This program is through the Government of Canada and it provides a 15 per cent income tax credit towards closing costs for eligible applicants. The credit applies to a maximum of $5,000 in closing costs which would result in a credit of $750. The FTHBC must be claimed in the year the home is purchased and claimants are only eligible if both they and their partner have not owned or lived a home for the year they buy and four preceding years. The maximum provincial Land Transfer Tax (LTT) rebate is $2,000 and the maximum Toronto rebate (MLTT) is $3,725. The provincial rebate is based on a percentage of the purchase price from 0.5% on the first $55,000 and increasing incrementally to 2 percent for anything over $400,000. The Toronto rebate uses a similar structure. So if the home you’ve purchased is over $400,000, and you’re a first-time buyer, the maximum rebate you’ll receive is $6,475. These rebates can be difficult to wrap one’s head around, but understanding them is well worth the headache (or a call to your local realtor)! Don’t forget, we’re always here to answer your questions and help with home related needs!
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