First Time Home Buyers- Land Transfer Tax and  Using Your R.R.S.P. For Your Downpayment

The federal and provincial governments offer two unique programs designed to provide some financial assistance to first time home buyers.  The federal program allows first time home buyers to access up to twenty fine thousand dollars ($25,000) of money that they may hold in their Registered Retirement Savings Plan (R.R.S.P.) to use towards the downpayment of a home.  The monies must be repaid back into the plan in monthly instalments over fifteen (15) years. 

The provincial government will waive up to two thousand dollars ($2,000.00) of the Land Transfer Tax that is paid by buyers of property. Every purchase transaction involving land (with a few limited exceptions) in Ontario is subject to a tax called the “Land Transfer Tax”.  It is only paid by the purchasers of the land (seller’s do not pay it).  The tax is calculated based on the purchase price.  As a special note to those from the City of Toronto, your city charges it’s own Land Transfer Tax in addition to the provincial land transfer tax.  So, in effect, you pay the land transfer tax twice if you purchase a property in the City of Toronto.  But you get to live in the shadow of the CN Tower, so it really seems worth it ;) . To calculate the land transfer tax that you will pay, click here for a helpful land transfer tax calculator.

I used to own land, but that was a long time ago.  Do I qualify as a first time homebuyer?

The qualification requirements for a first time home buyer are different for someone who is accessing their Registered Retirement Savings Plan (R.R.S.P.) monies to be used for a downpayment and for the Ontario Government land transfer tax rebate.

The federal government, which is responsible for the R.R.S.P. regulations, allows someone who has previously owned land in the past but who sold that property and has not held any interest in real property for five years to be considered a “first time” home buyer again.  This allows that person to access monies that they hold in an R.R.S.P account to use up to twenty five thousand dollars ($25,000) towards that downpayment.  For more information about this program, please click here.

The government of Ontario, which is responsible for the Land Transfer Tax regulations, DOES NOT allow a ‘reset’ like those in the federally regulated R.R.S.P. program.  Once you have held any interest in land of any kind, anywhere in the world, you are disqualified from the first time home buyer rebate on the Land Transfer Tax.