Property prices in Quebec have risen significantly in recent years, making them less affordable for potential buyers, especially first-time buyers. Fortunately, it is possible to obtain a grant for the purchase of a first home in Quebec. This is an important step in your home purchase.
These are essentially tax credits, special programs, and other incentives. Here’s a step-by-step guide to 7 forms of assistance you can rely on when considering buying a home for the first time.
1. The Home Buyer’s Plan (HBP)
This assistance allows first-time home buyers to do so with their RRSP (Registered Retirement Savings Plan). You can withdraw up to $60,000 (per spouse if you buy together) without paying any tax on this amount.
However, you must put this money back into your RRSP in equal installments over 15 years. You will also not be entitled to a tax deduction on these payments.
The first payment of your HBP is due within five years of withdrawal. If you do not repay within the prescribed timeframe, the amounts withdrawn will then be taxed as income.
The Home Buyers’ Scheme is one of the best grants for first-time buyers because it applies to most types of primary residences:
- single-family house,
- condo,
- mobile home,
- new construction.
HBP funds can be used for a down payment, notary fees, or other expenses related to the purchase of your first home in Quebec.
2. Federal and provincial government tax credits for first-time home buyers
The First-Time Home Buyers’ Tax Credit is offered by both the federal and provincial governments. The idea is to reduce the costs associated with purchasing a first home and make it easier to access real estate in Canada.
If you are in Quebec, the federal amount is $1,252.50 (including the tax abatement). This tax credit amounts to $1,400 at the provincial level. This makes a potential total of $2,652.50 for Quebec residents ( source ).
To be eligible for the federal credit, you must have purchased a principal residence in Canada and not have owned another home in the previous four years. The provincial credit, on the other hand, follows similar criteria.
This non-repayable assistance is calculated based on the lowest personal income tax rate. You can share it with co-buyers, and the unused portion can be claimed by your spouse or common-law partner.
However, it is not possible to carry over unused credit at the end of one year to another.
3. The Tax-Free Savings Account for First-Time Home Buyers (TFSA)
The CELIAPP is a registered savings plan that allows you to set aside funds to buy your first property, while benefiting from tax-free growth.
You can contribute up to $40,000 for life to your TFSA and withdraw the funds, including any earnings, tax-free when you’re ready to buy your dream home.
The operation is simpl;, you can:
- Open a CELIAPP with an authorized financial institution, such as a bank or credit union.
- Make contributions (capped at $8,000 per year) that grow your savings tax-free.
- Withdraw funds from your CELIAPP at any time, without having to pay tax on withdrawals.
However, first-time home buyers in Quebec must meet certain conditions, including:
- Have contributed to their CELIAPP for at least two years before the withdrawal.
- Use the withdrawal to purchase or build a qualifying home located in Canada.
- Meet other conditions, such as withdrawal limits and residency requirements.
4. The GST/HST rebate for new housing in Quebec
This program allows individuals to recover a portion of the taxes paid when purchasing a new home or building an eligible property.
The rebate is equal to 36% of the GST or the federal component of the HST, up to a maximum of $6,300. The amount received gradually decreases for properties with a fair market value exceeding $350,000.
Either way, this valuable assistance can significantly reduce the costs of acquiring your new home, including:
- condominiums,
- mobile home,
- floating house,
- tourist accommodation,
- duplex.
In addition, the house must be your principal place of residence and must have been purchased from a builder registered in the GST/HST New Housing Program. However, it must never have been previously occupied (including by the builder).
Have you set your sights on an existing home? Don’t panic, you can also take advantage of this assistance if there have been major renovations (90% or more of the interior must be removed or replaced).
To claim the rebate, complete and submit the form within two years of the date your property was built or acquired. It is available online on the government’s website, via the CRA’s My Account page.
You will need to attach a copy of your sales contract, settlement statement, and other relevant documents to your application.
5. Additional assistance for the purchase of a first eco-responsible home
Those planning to live in an eco-friendly home can benefit from additional assistance. This includes the Canada Greener Homes Loan, which allows you to finance your energy-efficient renovations interest-free.
Through this program, you can obtain a loan of up to $40,000 to finance eligible renovations recommended by an energy efficiency advisor. The minimum loan amount is $5,000, repayable over 10 years.
Once the loan is approved, you can begin renovation work. It’s possible to get some of the money up front to cover the down payments required by the contractor. You’ll receive the remaining balance once the work is completed and verified through a post-renovation appraisal.
Keep in mind that you cannot use the loan to finance renovations that have already been completed or are not eligible for the Canada Greener Homes Grant. Furthermore, only one loan is available per eligible property and per owner-occupant.
6. Municipal programs for the purchase of a first home in Quebec
In addition to provincial and federal first-time homebuyer assistance programs, several Quebec municipalities offer financial incentives and additional benefits to homebuyers.
In general, the goal is to stimulate real estate development and the revitalization of certain neighborhoods, or to encourage the adoption of energy-efficient construction and renovation practices.
Quebec City Family Access Program
The homeownership credit is an interest-free loan offered to eligible families to help them finance the down payment when purchasing an eligible property in Quebec.
The amount of the credit corresponds to a percentage of the purchase price of your home, depending on whether or not it has Novoclimat energy-efficient certification:
- Without energy-efficient certification: 5.5% of the purchase price (including taxes and rebate)
- With Novoclimat approval: 5.5% of the purchase price (including taxes and rebate) + 3.5% direct discount on the mortgage.
To benefit from this aid, you must respect the established income ceilings and undertake to occupy the property as your principal residence for at least five years.
Furthermore, the accession credit is repayable following one of the following events:
- Sale of the home
- Mortgage refinancing (increase in mortgage burden)
- Rental of the dwelling
- Term of the initial amortization period of the first mortgage (usually 25 years).
The amount to be repaid is 5.5% or 9% of the capital gain of the property, i.e,.difference between the purchase price and its market value at the time of repayment.
Montreal Residential Acquisition Support Program
Are you considering purchasing a property in Montreal? Then you’ll be pleased to learn that the City offers financial assistance programs to help you make your project a reality:
- New Home Purchase Grant: The lump sum amount varies between $5,000 and $15,000, depending on the type of household, the location of the property, type, and its environmental certification.
- Reimbursement of transfer taxes (welcome tax) for the purchase of an existing property: The amount reimbursed varies between $5,000 and $7,000, depending on the purchase price of the property and the number of children.
All household types are eligible to purchase a new property. To purchase an existing property, you must have at least one child under the age of 18.
In addition, the property must be located within the territory of the City of Montreal, and you must commit to living there as your principal residence for at least three years.
7. The repayment period is extended to 30 years for new houses
The Canadian government is extending the maximum mortgage term for first-time buyers purchasing a new home. They will now be able to borrow for 30 years instead of 25, allowing them to lower their monthly payments and make it easier to become a homeowner.
This initiative aims to stimulate housing supply and facilitate homeownership for young Canadians. It should be noted that this assistance is reserved for first-time buyers purchasing a new home.
In other words, if you opt for a used house or change ownership, you will still have to borrow for 25 years.
Find the grants that best suit your situation.
First-time homebuyer grants in Quebec are a valuable aid in reducing the costs of purchasing your new home. Some allow you to save without income tax to complete your project (such as the HBP), while others take the form of reimbursements.
There are even municipal programs that you can combine with other forms of financial assistance and tax relief offered to new homeowners by the provincial and federal governments.
Start your grant search early, because in some cases (like the Canada Greener Homes Loan), you don’t have to start work yet. Visit the page dedicated to each grant to make sure you meet all the requirements.
