You may need help understanding the Manitoba housing market. It is even more complicated for a first-time home buyer. This article answers basic questions on how to go about things, how to go about a mortgage, how to go about a down payment and other criteria that make you an eligible homebuyer.
Different Programs For First-Time Homebuyers
Every home province in Canada has its respective programs. These programs are rebates of the land taxes an individual is to pay. Similarly, Manitoba has its land transfer tax. Nevertheless, it has no rebate for first-time homebuyers.
This deal may seem attractive for first-time buyers, but that is incorrect. Prices of properties are tangibly lower in Manitoba than in more prominent locations like Vancouver, Toronto, and Montreal. Manitoba has comparable transfer tax rates to other provinces.
Since first-time homebuyers do not have a rebate for their land transfer tax, they have a lowered taxed amount than other major provinces.
Land Title Tax In Manitoba
Land transfer taxes vary with different provinces. On the high side, the tax is 5% across some provinces like Quebec, Ontario, and British Columbia. Other provinces like Manitoba have a lower amount which is about 2%.
In Manitoba, the land title taxes depend on the buying price of the house. In addition, you will need to pay a $70 fee for registration on all transactions. Here are the estimated rates as listed below:
- If the property value is within the first $30,000, you will not pay any tax.
- If the property value is higher than $30,000 but less than $90,000, the tax rate is 0.50%.
- If the property value is higher than $90,000 but less than $150,000, the tax rate is 1.00%.
- If the property value is higher than $150,000 but less than $200,000, the tax rate is 1.50%.
- If the property value exceeds $200,000, the tax rate is 2.00%.
Let us assume that the price of the home you got in Winnipeg is $300,000; here is the breakdown of the expected amount as land transfer tax:
a. $0 on the first $30,000
b. $300 when it is between $30,000 and $90,000
c. $600 when it is between $90,000 and $150,000
d. $750 when it is between $150,000 and $200,000
e. $2,000 when it is between $200,000 and $300,000
Remember that there is an inevitable $70 fee for registration. Hence, your total transfer tax will be $3,720. That may seem like a lot of money, but the difference is clear with other provinces.
Federal Programs For A First-Time Homebuyer
First-time homebuyers enjoy a lot of grants and tax rebates as provincial support. However, it continues beyond there as there are some federal programs for first-time homebuyers. This means that every first-time buyer in Manitoba can enjoy both federal and provincial benefits.
Here are some federal programs that will be beneficial to you. Nevertheless, it is essential to note that federal programs may have different eligibility criteria from the Manitoba programs. Hence, be on the lookout for their details.
First-Time Home Buyers Tax Credit
This tax credit is a direct program for individuals that have purchased their first home. The tax credit can be up to $750 – individuals can claim this amount as a tax return within the first year of buying the house.
Another beautiful part of this program is that buyers with a disability can also enjoy the first-time home buyers tax credit. They can enjoy these benefits in the first year of every home purchase. If you think you are entitled to this benefit, you can contact a mortgage provider or broker on how to go about things.
Getting a good mortgage rate as a first-time buyer depends on having a tangible down payment and good credit. Also, no rule says you can only apply for a mortgage from your day-to-day financial institution. A mortgage broker can shop around to help you get the best rate. You do not pay a mortgage broker; the lender pays them. So don’t worry about any additional fees. Mortgage brokers are accustomed to the application process. Get a reliable one to facilitate the application process.
RRSP Home Buyers’ Plan
The RRSP (registered retirement savings plan) Home Buyers’ Plan allows individuals to take a loan of up to $35,000 from their RRSP. Couples can borrow up to $70,000. The funds are the perfect way to get a down payment for your first home.
There is no pressure as to the time to return the money. You can gradually spread the amount within the next 15 years. Nevertheless, if you cannot pay it back, you will have to pay income tax on the unpaid fee. At this point, your RRSP deposits should be tax-deferred.
HST/GST New Housing Rebate
The HST/GST New Housing Rebate makes the new purchase less burden for a first-time homebuyer. You will pay GST or HST if you have a tangibly renovated, off-the-plan, or new property. This amount is together with other closing costs.
The rebate is about 36% of the GST paid after you purchase. If the home’s market value is $350,000 or less, the individual will get the total rebate. On the other hand, there is a partial rebate for a house priced between $350,000 and $450,000.