Acquiring a home can be a challenge for young buyers, with high closing costs and legal complexities to navigate.
Fortunately, Montreal offers a range incentive programs that first time buyers can apply for, to ease the financial burden of homeownership.
1. Home Buyer’s Plan
The most well known incentive program is the HBP, or Home Buyer’s Plan. The HBP is offered by the federal government and enables buyers to tap into their RRSP’s for up to $25,000. The loan is non-taxable, and borrowers have 15 years to reimburse the full withdrawal back into their retirement plan.
Young buyers who don’t have an RRSP account going yet can also borrow a loan from their financial institutions to pay towards their RRSPs, and then benefit from the HBP on the borrowed amount. Keep in mind that interest would apply, in this case, and that the interest amount is non deductible. Consult with your accountant as to whether this option would be beneficial in your particular case.
2. Municipal home ownership programs
In addition to the HBP, several municipal programs will offer financial advantages to families who choose to settle in a particular city. These incentives generally take the form of tax breaks or purchase cost rebates.
The Home Ownership Program assists with a lump sum financial gift when you purchase a new property, a refund of your welcome tax if you’re a family with at least one minor child (applicable to new developments and properties with 1, 2 or 3 above the ground dwellings), and easier eligibility to the city’s renovation programs should you buy an older property.
The First-Time Home Buyers’ (FTHB) Tax Credit allows Canadian buyers to claim a portion of their home purchase on their personal tax return that same year. This helps with closing costs such as notary fees and inspections.
To be eligible, you, your spouse or common-law partner must have acquired a primary residence after January 27, 2009.
Municipal perks can also extend to outside the buyer’s enjoyment of their new neighbourhood. Buyers with at least one child who is under 18 are entitled to receive 6 months of free public transit on purchase of a one-year OPUS full-fare pass (one free pass per household) and 2 Accès Montréal cards to take advantage of discounts on many activities offered in the cultural metropolis.
3. Private programs
Lastly, incentives are also often offered by developers. Since competition is fierce among condo projects, many builders offer incentive programs, such paying the first few months of your mortgage or offering the possibility of a smaller down-payment.