November 15th 2019
There are currently two government incentives for first time homebuyers. First, this article will discuss the Land Transfer Tax refund. Second, it will turn to the newly created shared-equity loan program offered by the 
Federal Government.
Every purchase of land in Ontario is subject to Land Transfer Tax (LTT). The rate of taxation is adjusted depending on the amount paid, with the highest rate of 2.0% applying to all amounts exceeding $400,000. For a qualifying first-time homebuyer, the government offers a rebate which will cover a maximum of $4,000 of the LTT owing. Eligible homebuyers in Toronto may also qualify for a Toronto Municipal Land Transfer Tax Rebate up to a maximum of $4,475, in addition to the Ontario LTT rebate.
Eligibility for the LTT refund includes whether the purchaser is at least 18 years old, is a Canadian citizen or permanent resident of Canada, will occupy the home as a principal residence within 9 months of the transfer, and has never owned an eligible home, or an interest in an eligible home, anywhere in the world, at any time. A final qualification concerns whether the purchaser 
has a spouse who owned an eligible home while he or she was the purchaser's spouse. This qualification is worth expanding on. A person can be a spouse through marriage or cohabitation. Under s.29 of the Family Law Act, persons who are not married to each other are spouses if they have cohabited continuously for a period of three years or more, or in a relationship of some permanence if they are the parents of a child. If the purchaser has a spouse who owned an eligible home while being their spouse, no refund is available to either person, even if the purchaser never lived in the property with their current partner.
In some situations, individuals who are buying together may claim a partial rebate for LTT. For instance, if a couple does not meet the definition of spouse, the eligible partner may claim a refund based on their proportionate interest acquired in the home. Another situation involves parents who are purchasing a home with their child. Again, the eligible child may claim a refund based on their portion of interest acquired. If title is taken jointly by parents and children, which is often the case for financing reasons, the ministry will accept that the parents are on title as trustee for the child, and an application for the refund can be made after the transfer. This application must provide evidence the parent did not acquire a beneficial interest in the property, which can include a copy of a trust agreement 
drafted by the solicitor. For more information on trust agreements or your eligibility for the LTT rebate, be sure to contact Liddiard Law today.
Last, the new First Time Home Buyer Incentive commencing this November will allow the Federal government a share of ownership in your home in exchange for an initial cash advance. The idea behind this shared-equity program is that a first-time home buyer can receive 5% of their purchase price for a used residential purchase, increasing their ability to finance and lowering their monthly mortgage obligations. This 5% government ownership in the home can be repaid at any time, including at the time of sale, or after 25 years, but the amount is subject to an appraisal of the fair market value at the time of repayment. The incentive amount increases to 10% for new home purchases. To be eligible for the program, the combined qualifying income of applicants cannot be higher than $120,000. This program has many considerations and criteria, so it is best to speak with a trusted mortgage professional to see if it can be of assistance to you.
Michael Liddiard, BA MA JD | Liddiard Law Professional Corporation | michael@liddiardlaw.ca