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Financial Incentives for First Time Buyers

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Acquiring a home can be a challenge for young buyers, with high closing costs and many financial complexities to navigate. But luckily, Montreal has several incentive programs that first time buyers can lean back on to ease the initial burden of homeownership. Here are three important ones you should know about:

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.

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.

Montreal offers a range of advantages to individuals and families who choose to settle here. For example, 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.

Furthermore, if you already own a property, or have owned one in the last five years, you are entitled to receive a refund of your “welcome” tax if you are a family with at least one child who is under 18 and you purchase a new 3-bedroom property.

The perks can also extend to outside real estate.  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.

Private programs

Lastly, incentives are also often offered by developers. Since competition is getting tougher in the real estate market, many builders offer incentive programs, such paying the first few months of your mortgage or offering the possibility of a smaller down-payment.

Feel free to contact us should you be curious about any of these programs. We’d be happy to offer more information, resources and recommendations pertaining to your particular situation.

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