To ease the cost of buying a home, the provincial & federal governments provide three primary tax incentives for first time buyers in BC:

Property Transfer Tax Exemption:
When buying a home in BC, the purchaser is required to pay Property Transfer Tax — 1% of the first $200,000 and 2% of the remainder.  However, qualified first time buyers are exempt from this cost for purchases less than $425,000.  For a $400,000 home, that’s a savings of $6,000.

A partial exemption is available for homes between $425,000 – $450,000, but above that you will have to pay the full meal deal.  For more information on this tax incentive, click here.

First Time Home Buyers’ Tax Credit (HBTC):
While this savings is not as significant as the Property Transfer Tax exemption, the HBTC still puts some money back into buyers’ pockets.  Calculated by multiplying the lowest personal income tax rate by $5,000, this tax credit was $750 ($5,000 x 15%) in 2010.  To learn more about the HBTC, click here.

Home Buyers’ Plan (HBP):
The HBP allows qualified first time buyers to withdraw up to $25,000 from RRSPs (per buyer) to be used for down payment & closing costs.  With couples, for example, the limit extends to $50,000.  Buyers are required to repay 1/15 or more of the amount every year until fully repaid (15 years or less).  Refer here for more information on the HBP.

To qualify for the above incentives you must be a first time buyer purchasing a home for use as a primary residence.  The requirements for each program vary; click here to learn if you qualify.

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