Working in mortgages can literally be like walking on a minefield sometimes. There are so many different policies, procedures and surprises that can come at you, from any direction, you almost have to be like the guy from The Matrix, trying to dodge bullets. Not surprisingly one of the biggest confusing points is the true definition of a “First-Time Buyer”. Since we have three different levels of Government (City, Province, Federal), and multiple land transfer tax agencies, I thought – hey! Why not figure this out and tell you so you know where you stand.
Obviously the easiest way to define “first-time buyer” is this. You have never, ever, ever bought a home in your life. Anywhere in the world. You are single, or, with a partner, and you have never in your life had title to any single property. Well – guess what? You pass the test! You’re considered a first-time buyer under CRA rules and can take out up to $35,000 in RRSPs.You’re considered a first-time buyer under the land transfer tax offices, and can get up to $8000 in rebates. And, you’re a first-time buyer under the new CMHC Shared Equity Program, and can participate.
Well! That was easy!
However, what if you’re buying a property with someone who already owns a property?
If married: you’re not a first-time buyer under any circumstances. Sorry!
If common law: Nope. Not a FTBer.
If legally single and in love and buying together? Yes. Possibly.
What if you’re buying a property with someone who owned a property?
This depends on when you were married.
If your partner owned a property, you got married, and then that property was sold? You’re not a first-time buyer under Ontario law.
If your partner sold the property before you were married, then, yes, you could be a first-time buyer under Ontario law.
For CRA-purposes, if someone owned a property, that someone needs to wait four years to use their RRSPs from the time they sold the property in order to access RRSP funds.
What if you owned a property but don’t own it anymore?
If you owned a property before and sold it – you’re not a first-time buyer under Land Transfer Tax rules.
However, you can be a first-time buyer under CRA rules, if you owned a property four years “plus a day” prior to buying, you can use RRSP funds a second time. What does four years plus a day mean? it means you have to have owned the property four years ago and depending on when it closed, you may have to wait until the calendar year ends to be considered a first-time buyer again.
So – there you go! You can be a first-time buyer twice (or more) in your life, for CRA and RRSP withdrawal purposes.
For land transfer tax purposes, you cannot ever be a first-time buyer twice.
At the end of the day, your lawyer is by far the best resource to find out how much you can save if you’re a first-time buyer, or, if you want to confirm your status with the CRA and Land Transfer Tax Offices. If you want to participate in the first-time buyer incentive program, I can help you out no problem.