Wondering how to get assistance as a first time home buyer, buying in Nova Scotia in 2023.? Think you may be stretched too thin with the current inflation and interest rates? The Nova Scotia and Canadian governments have programs that may just make the difference of you becoming a homeowner in 2024.
Current State of Housing
As the buying frenzy of the last two years starts to cool, several factors make buying your first home more expensive than pre-pandemic home values. The biggest issue is the supply of housing. From rental units to high-end homes, Canada is facing a housing shortage.
Finance Canada and the Canada Mortgage and Housing Corporation have estimated that Canada will need to build at least 3.5 million new homes by 2031 to keep up with population growth.
In Canada, about 200,000 new housing units are constructed yearly, from detached homes to individual condos and other residential types. Canada will need to double its current rate of new construction over the next decade to meet this need.
5 Government Programs to Assist New and First Time Home Buyers
#1 First-time Home Buyers Tax Credit
Revenue Canada has had assistance for first-time home buyers by way of a tax credit in place for a while. Changes for the upcoming tax year mean that first-time home buyers are eligible for a recently increased tax credit from $5000 to $10,000! This means approximately a $1500 tax deduction of their taxes.
#2 The Federal Home Buyers Plan
This is a long-standing program that allows you to withdraw up to $35000 from your RRSPs without having to declare it as income in the following tax year. Canada Revenue Agency allows you to repay what was withdrawn from your RRSP within 15 years. A couple can withdraw a total of $70,000 from their RRSP which would be non-taxable.
#3 GST/HST and Renovation Rebates
If you or a relative of yours has recently purchased a new or newly renovated home, you may be eligible for a GST/HST new housing rebate! This rebate covers a portion of the GST or federal part of the HST paid for the home. Be sure to check with your agent or the builder to see if you will be charged HST on the purchase price.
New Housing Options
With the new housing models evolving due to the housing shortage the Federal Government is offering in 2023 the Multigenerational Home Renovation Tax Credit, which would provide up to $7,500 in support for constructing a secondary suite for a senior or an adult with a disability.
Claim up to 15%
This refundable credit would allow families to claim 15 percent of up to $50,000 in eligible renovation and construction costs incurred to construct a secondary suite. This suite must have access to a kitchen and bathroom.
#4 Down Payment Assistance Program
The most notable change in Nova Scotia for assistance for first-time home buyers is the Down Payment Assistance Program. This program allows first-time homebuyers can borrow the 5% down payment from the government interest-free and repayable over 10 years. While the program was introduced a couple of years ago, there was not a lot of availability of homes that were on the market that fit the program’s price point criteria.
Home Price Ranges Increased
The program now allows for properties priced up to $375,000 in the Annapolis Valley, up to $300,000 in the Northern and Eastern regions of Nova Scotia, and up to $500,000 in Halifax.
program has now also adopted the CMHC’s definition of a first-time homeowner. First -ime Home Buyers now include one who has gone through a breakdown of a marriage or common-law partnership.
Other eligibility criteria are that you must be pre-approved for an insured mortgage, have a total household income is less than $145,000, are a Canadian citizen or has permanent resident status, and have resided in Nova Scotia for at least 12 months.
#5 Supporting Rent-to-Own Projects
The Federal Budget of 2022 proposes $200 million in support under the existing Affordable Housing Innovation Fund. This fund will include $100 million to support non-profits, co-ops, developers, and rent-to-own companies building new rent-to-own units.
Many Canadians rent because they value the flexibility that comes with it. For others working towards ownership, the rising home prices are increasing the down payment amounts required further out of reach.
Rent-to-own arrangements can help alleviate that barrier. This investment will provide opportunities for Canadians to get on the path to homeownership faster while also encouraging new housing supply that supports affordability.