First Time Buyers Mortgage Incentive Program

Darcy DoyleBlog, Mortgage Tips

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Did you know one out of every three Canadians owns a home somewhere in Canada?

Real estate is a great investment. There continue to be incentives to help first time buyers achieve the dream of home ownership because, for most, the upfront costs of getting into the home are the biggest barrier for those looking to buy.

However, owning a home tends to be the biggest form of savings for most Canadians as continued payments build equity in the home that increases over time.


One of the ways that the government has come up with to be able to help more Canadians achieve ownership is by offering a transfer tax exemption for first time buyers. Property transfer tax can be extremely expensive and, depending on the purchase price of the home, can even exceed the down payment and/or closing costs.

The way that property transfer tax is calculated is that the buyer pays 1% on the first $200,000, and 2% on the balance thereafter, which can add up quickly for more expensive purchases.

The first time buyers program offers to waive the property transfer tax in its entirety under certain conditions. First and foremost, the home must be at or below a fair market value of $425,000 if it was registered before February of 2014, or be equal to or less than $475,000 if it was registered after that date.

To qualify for the exemption, the buyer must be a Canadian citizen or permanent resident and have lived in British Columbia for at least the previous 12 months. The only exception to this would be if the buyer had filed taxes at least twice in British Columbia over the span of the previous six years. However, if you become a citizen or permanent resident in the 12 months following the purchase, you can file for a refund of the property transfer tax.



Additionally, if there is a joint ownership, or if the home is close to the above mentioned valuations, but slightly over, there are partial exemptions that can be taken advantage of as well that are based on the percentage of ownership and the total value of the home.

The house must be located in British Columbia and be purchased with the intention for its use to be as a primary residence.

To keep the exemption on the property, the owner must file in subsequent years to make sure that they continue to meet the requirements to keep the exemption.

There are follow up items that will be required of them. The first one is that the home has to be occupied within the first 92 days upon purchase. Additionally, in order to continue to qualify for the exemption, the owner must still reside there as their primary residence.

The exemption can also be applied to the purchasing of a vacant lot with the intention of building a home there and occupying it in the future as the owner’s primary residence. In this case, to continue to qualify, the owner would need to have built and moved into the home within the first year following the purchase as well as be currently occupying the property as a primary residence.