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Home Buyer & Property Owner Programs
A home is usually the single largest investment that most people make in their lives. Achieving your dream can be made easier by taking advantage of various government programs for home buyers. Some of the programs are targeted to first-time buyers, while others apply more generally. To learn more, select from the programs below or contact Brian for additional information on these programs as well as help in determining your eligibility.
Government Programs for Home Buyers
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RRSP Home Buyers Plan
The Home Buyers' Plan (HBP) is a program under which you can, generally, withdraw up to $20,000 from your registered retirement savings plan (RRSP's) 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 withdrawal 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 another individual, 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. To take advantage of this program, contact Michele or Brian today.
Details
Up to $20,000 per person could be withdrawn tax-free from RRSP's to buy or build a principal residence. Couples, including common law will be able to withdrawal up to $40,000.
You must meet the first-time buyer's condition to take advantage of the HBP program. You will not be considered a first-time home buyer if you or your spouse owned a home that you occupied as your principal place of residence in the past 5-years. To determine the 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Home buyers withdrawing funds do not have to pay income tax on the amount withdrawn as long as the funds are repaid into an RRSP within 15-years.
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 2004 will have until October 1, 2005 to acquire a qualifying home and their first annual repayment will be due by the end of 2006 or the first two months of 2007.
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.
You can participate in the HBP more than once if:
Your HBP balance for your previous participation is zero on January 1 of the year you want your new participation in the HBP to occur, and,
You meet the first-time home buyer's condition and all other HBP conditions that apply to your situation.
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 individual, or,
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.
Source: ©Toronto Real Estate Board (TREB). Re-Printed by permission on POWERHOMES.CA
5% Down Payment Program
With as little as 5% of the purchase price all homeowners now have access to mortgage insurance enabling them to enter the housing market, as long as they manage the costs of home ownership. To find out how, contact Michele or Brian today!
Details
Mortgage insurance for 95% mortgages are now available to both first-time and repeat home buyers.
Buyers using the program may consume up to 32% of their gross family income for payments of principle, interest, property taxes and heating, but their total debt load ratio cannot exceed 40% of their family income.
Insurance premiums on loans above 90% of the lending value of the property will be 3.75% of the mortgage loan... however, this premium can be added to the mortgage.
Price restrictions include a $300,000 ceiling on homes purchased in the Greater Toronto Area (GTA).
The maximum amortization period is 25 years.
Borrowers are required to demonstrate as the time of the application their ability to cover closing costs equal to at least 1.5% of the purchase price.
Where the minimum equity requirement is being met by way of a financial gift, the funds must be in possession of the borrower 15 days before making an offer to purchase.
Source: ©Toronto Real Estate Board (TREB). Re-Printed by permission on POWERHOMES.CA
CMHC Purchase Plus Improvements Program
Canada Mortgage and Housing Corporation (CMHC) insured mortgage loans are available to cover the purchase price of a home as well as an amount to pay for immediate major renovations or other improvements that the purchaser may wish to make to the property. This option eliminates the need to obtain secondary financing after the purchase to pay for improvements. The home buyer obtains a single first mortgage, makes a single mortgage payment, and benefits from the first mortgage interest rates. To benefit from this program, contact Brian.
Details
The insured loan will be based on the lower of:
The purchase price plus the actual cost of improvements, or,
The 'as improved' market value. Prior to approval, CMHC will determine the market value of the property after renovations or improvements. The lending value will not exceed the market value of the property after the renovations or improvements.
Successful applicants must meet the following criteria:
A minimum of 5% down payment of the total cost (purchase price plus renovations or improvements).
Cost estimates for renovations or improvements.
Qualifications to obtain a CMHC-insured loan through an approved lender
Example: Purchase Price $100,000
Renovations or Improvements Costs $25,000
Total Cost $125,000
Lending Value $125,000
Maximum Mortgage Allowable (95%) $118,750
Minimum Down Payment Required (5%) $6,250
Where the loan-to-value ratio is greater than 90%, the maximum house price in Toronto including the cost of improvements is $250,000.
Michele and Brian Power can make this dream a reality for many first-time home buyers. With strategic partnerships in the field of contracting and renovating as well as access to CMHC approved lenders, we can handle and coordinate your Purchase Plus Improvements project from start to finish.
Source: ©Toronto Real Estate Board (TREB). Re-Printed by permission on POWERHOMES.CA
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GST New Housing Rebate Program
You may be eligible to claim a rebate for a part of the GST you pay on the purchase price or cost of building your home if:
You buy a new or substantially renovated home (including the land or if you lease the land) from a builder.
You buy a new mobile home (including a modular home) or a floating home from a builder or vendor.
You buy a share of capital stock of a co-operative housing corporation.
You construct or substantially renovate your own home, or carry out a major addition (or hire another person to do so).
Your home is destroyed in a fire and is subsequently rebuilt.
Details
Resale homes are exempt from the 7% GST.
New homes are subject to the 7% GST. New home buyers can apply for a 2.52% rebate of the 7% GST applicable to the purchase price to a maximum of $8,750 for homes costing less than $350,000 before GST.
For new homes priced between $350,000 and $450,000 before GST, the GST rebate would be reduced proportionately.
New homes priced at $450,000 or higher (before GST) would not receive a rebate.
NOTE: In the Greater Toronto Area (GTA), most builders include the GST in the price of the house, and any rebate would be assignable to the builder as they would be absorbing the net GST cost.
Residential Rehabilitation Assistance Program
The Residential Rehabilitation Assistance Program (RRAP) is a federal government program that provides financial assistance to renovate or repair housing that needs to be brought up to basic health and safety standards, or to convert non-residential properties to affordable housing. Deferred maintenance, cosmetic replacements, improvements for resale and work carried out before a RRAP loan is approved are not eligible under this program.
RRAP provides funding under the following categories:
Homeowner
Rental
Rooming Houses
Residential Conversions
and for Persons with Disabilities
Each category has distinct eligibility criteria. In most cases, to be eligible, homeowner or tenants must be below the Core Need Income Threshold (CNIT), a limit set by the Canada Mortgage and Housing Corporation (CMHC), based on household size and area. Also, rents must be at or below the Median Market Rent (MMR) established by CMHC for the area. RRAP is coordinated by the CMHC. In Toronto, the City of Toronto administers RRAP on behalf of the CMHC.
Homeowner
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Homeowners may apply if the value of their house is below a specific figure, and if their household income is below the CNIT.
Eligibility is limited to properties lacking basic facilities or in need of major structural, electrical, plumbing, heating or fire safety repairs.
Forgivable assistance is available only for mandatory repairs relating to health and safety and to extending the useful life of the property. Repayable assistance is available for other eligible repairs.
Maximum total loan for the Toronto area is $18,000 with a maximum forgivable component of $12,000.
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Rental
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Offers financial assistance to landlords of affordable rental housing to pay for mandatory repairs to self-contained units occupied by tenants with incomes below the CNIT.
Eligibility is limited to projects having pre and post RRAP rents at or below the MMR for the local area. In addition, the property must lack basic facilities or require major structural, electrical, plumbing, heating or fire safety repairs.
Eligible repairs are limited to mandatory repairs required to bring properties up to minimum levels of heath and safety. Once repaired, the property should have a further useful life of 15 years, assuming normal care and maintenance.
Assistance is in the form of a fully forgivable loan of up to 100% of the cost of mandatory repairs. Landlords must enter into an agreement that places a ceiling on the rents that may be charged after the repairs are completed, and limits rent increases during the term of the agreement. The landlord mus also agree to limit new occupancy to tenants with incomes below the CNIT.
In the Toronto area, the maximum assistance per unit is $18,000.
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Rooming Houses
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Offers assistance to owners of Rooming Houses with rents affordable to low-income individuals. Pre and post RRAP rents must be at or below 60% of the MMR for the area.
The property must lack basic facilities, or require major structural, electrical, plumbing, heating or fire safety repairs.
Once repaired, the property should have a further useful life of 15 years, assuming normal care and maintenance.
The assistance is in the form of a fully forgivable loan of up to 100% of the mandatory repairs.
In the Toronto area, the maximum assistance per bed unit is $12,000.
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Residential Conversions
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To be eligible, landlords must own and convert non-residential properties to create bona fide affordable permanent accommodation.
Limited to properties that are environmentally safe and can be feasibly converted to residential accommodation, which will be viable based on agreed upon post conversion rents. The applicant must be able to demonstrate that the appropriate residential zoning and building permits can be obtained.
Units must be occupied by tenants who have incomes at or below the CNIT. Pre and post RRAP rents must be at or below 60% of the MMR for the area. Assistance is in the form of a fully forgivable loan.
In the Toronto area, the maximum assistance is $18,000 for each self-contained rental unit.
Persons with Disabilities
-------------------------------------------------------------------------------Offers financial assistance to homeowners and landlords to undertake accessibility work to modify dwellings occupied or intended for occupancy by persons with disabilities.
Properties must meet minimum health and safety standards.
Homeowners map apply if the value of their property is below a specific figure, and if their household income is below the CNIT.
Landlords may apply for modifications to units occupied by tenants with incomes below the income threshold.
Modifications must be related to housing and be reasonably related to the disabled occupant's disability.
In the Toronto area, the maximum assistance is $18,000. For homeowners, the maximum forgivable component is $12,000. Landlords are eligible for 100% forgiveness, but must enter into an agreement that ensures the units remain affordable to tenants.
Greater Toronto Area MMR
1 Bedroom $770
2 Bedrooms $905
3 Bedrooms $1,075
4 Bedrooms $1,270
Greater Toronto Area CNIT
1 Bedroom $31,000
2 Bedrooms $36,500
3 Bedrooms $43,500
4 Bedrooms $51,000
Source: ©Toronto Real Estate Board (TREB). Re-Printed by permission on YORK REGION MLS.COM
Province Sets 2005 Rent Increase Guidelines
January 1, 2005
Annual Rent Control Guideline
The annual guideline is the maximum amount that a landlord can increase a tenant’s rent without making an application to the Ontario Rental Housing Tribunal.
The 2005 guideline of 1.5 per cent is based on eight common costs involved in the operation of rental housing such as maintenance, hydro, heating costs and taxes. Each cost category is weighted according to its proportion of the overall costs of running a multi-residential property. The costs in these categories are averaged over a three-year period.
The guideline reflects increases in landlord operating costs. The table showing the individual operating cost increases in the 2005 Rent Control guideline was published in the August 28, 2004 edition of the Ontario Gazette.
The guideline applies to most private residential rental accommodation covered by the Tenant Protection Act, 1997. The guideline does not apply to residential dwellings first occupied on or after November 1, 1991, nor does it apply to social housing units and nursing homes.
Tenant Protection Act
On June 17, 2004, the government amended the Tenant Protection Act, 1997 to remove the two per cent base from the guideline calculation. This was done as a “time out” while government consulted on reforming the act.
A long-term solution for the guideline calculation will be part of the proposed new legislation which the government intends to introduce in the 2005 winter legislative session.
Historical Rent Increase Guidelines
2005
1.5%
2004
2.9%
2003
2.9%
2002
3.9%
2001
2.9%
2000
2.6%
1999
3.0%
1998
3.0%
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