Whether you have been saving up for a down payment for years or you have just recently decided to take the plunge into home ownership, you have likely realized that there is a surplus of educational material directed at first-time home buyers. Do you need to know it all?
Don’t worry! While there is a lot you do need to know, there are also professionals, such as our Edmonton real estate lawyers, who are available to help and make sure that your first home buying experience is a good one!
To get you started, here are 5 things to be aware of as a first-time home buyer in Alberta:
1. Mortgage Basics
The size of mortgage that you qualify for and the size of the down payment you have saved will dictate the amount you can afford to spend on a home.
In general, your ability to qualify for a mortgage is dependent on:
- your income
- your credit rating
- the size of your down payment in relation to the total purchase price of the property.
Over the life of your mortgage, the amount you spend on interest is likely to be significant, so it is probably worth your while to shop around for the best interest rate available to you.
2. Canada’s Home Buyer’s Plan
The Home Buyer’s Plan allows you to withdraw up to $35,000 from your RRSP to use for a down payment on a home without triggering any income tax on the funds as long as you repay the amount you withdraw over a 15 year period. There is a minimum amount you must repay each year or risk triggering income taxes on that amount.
In order to qualify for the Home Buyer’s Plan, you must be a first-time home buyer.
3. First-time home buyer incentives and tax credits
As a first-time home buyer, there are several incentives and tax credits for which you might qualify, including:
- the federal first-time home buyer incentive, which is a 5% (or 10% for new construction) shared equity mortgage with the Government of Canada
- the first-time home buyer’s tax credit, which is a $5,000 non-refundable tax credit that can provide you with a total tax rebate of up to $750
4. GST rebate for new housing
If you are considering purchasing a newly built home from a builder, you may be put off by the idea of having to pay an additional 5% on top of the purchase price for GST. But as long as you intend your new home to be your primary residence, then you should be entitled to a rebate from the federal government.
Corporations and partnerships are not entitled to the GST rebate for new homes, so you must buy and register your new home in your name in order to qualify.
4. Why you need a lawyer
In Alberta, a lawyer must be involved in the purchase and sale of land. Your lawyer will:
- make sure the transfer of land is legal and binding
- initiate the process of registering the land in your name
- facilitate the transfer of the down payment to the seller
- adjust the purchase price to account for the property taxes in the year of sale.
For more information on these 5 thing to be aware of as a first-time home buyer in Alberta, contact one of our Edmonton real estate lawyers today. Please remember the content in this article is only intended to act as a general overview on a legal topic and does not constitute legal advice. For more specific legal advice please consult with a real estate lawyer today.
