Buying a Home in Canada: A First Time Homebuyer’s Mini-Guide

New home buyers in Alberta get a slew of tax credits and special programs to make buying a home easier and more affordable. Here are just a few of those benefits you should consider:

The Pre-Approval Process

Getting pre-approved is a major step toward owning a home and is practically necessary before any realtor will speak with you. If you can’t show that you’re ready to buy a home, you’re not ready to buy a home.

Getting pre-approved through a lender means filling out a loan application, proving your income, and then getting a letter of approval from the bank showing that the lender intends to back you for the purchase of the home.

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The Home Buyers’ Tax Credit

The Home Buyers’ Tax Credit is a non-refundable credit based on a fixed dollar amount that may change every year. The credit is calculated by multiplying the lowest personal income tax rate for the the year by $5,000.

You will qualify for the rebate as long as you purchased a qualifying home, and you didn’t live in another home owned by you or your spouse in the year you purchased the new home.

“Green” Rebates

The government of Alberta also offers rebates through the “Built Green” initiative. If you purchase a new energy-efficient home, you’ll get a rebate on the cost of a home builder’s permit. Many of these homes for sale would qualify for this type of rebate, which makes them worth checking out.

Energy Efficiency Rebates

The Alberta government offers a rebate to existing home owners as well as new buyers when they do remodelling that includes energy-efficient upgrades.

The upgrades must have an EnerGuide rating of 80 or more to qualify. The rebates range between $1,500 and $10,000.

Examples of upgrades that qualify include a new water heater, furnace, wall, basement, and ceiling insulation, or a new washing machine.

GST/HST New Housing Rebate

Canada allows home buyers to get a rebate on a home purchase if they renovate or substantially alter the residence. Substantial renovations include things like gutting and rebuilding the interior, building an addition to the home, and extensive remodelling.

Rebates equal 1.5 percent of the GST paid on the home as long as the value is under $350,000.

Homes between $350,000 and $450,000 will receive a reduces rebate, and anything over $450,000 does not qualify.

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Home Buyers’ Plan

The government has put together a special Home Buyers’ Plan to let new home buyers withdraw up to $25,000 from an existing retirement savings plan for the purchase of a new home. New homes and existing ones are covered under this provision.

The applicants have to be in the process of buying their first home or they must be recognized as disabled and purchasing a more easily accessible house.

The withdrawal isn’t a free withdrawal, however. Homeowners must begin repaying the retirement savings plan within two years, but they have up to 15 years to complete the payoff.

Andrew Salas has enjoyed a fruitful career in property management. He enjoys the opportunity to write about his experiences online in order to benefit others looking to invest in property. His wisdom has already been imparted on a number of relevant websites associated with real estate investments.