At the heart of addy is a quest to enable everyone to own property. We believe in real estate for all and strive to remove the barriers that keep so many people out. When you invest in a property with addy, you become an owner in the property – you are one of many owners, in some cases one of over 2,000 other Canadians – but you are an owner nonetheless.
A commonly asked question from members though is how does investing in an addy property, and thereby becoming an owner, affect my ability to receive a first-time Home buyers’ help from the government. Here’s what you should know.
Home buyer aid
The Canadian government offers three programs to help first-time home buyers. These programs are similar but the distinctions are important.
Home Buyers’ Tax Credit
This is simple. First time home buyers can claim a $5,000 non-refundable income tax credit on a qualifying house they’ve purchased during the recent tax year.
Home Buyers’ Plan
This one is also fairly straightforward. First time home buyers are permitted to withdraw up to $35,000 from their RRSP to use towards the purchase of a home. This money is paid back within 15 years.
First-Time Home Buyer Incentive
This last program is a bit more complicated, but the goal is the same. The First-Time Home Buyer Incentive seeks to relieve some of the financial burden on those looking to buy a home by helping with the down payment – one of the biggest barriers to homeownership. Five percent of the down payment can be covered through this program (10% on newly constructed houses). It is a shared equity mortgage, in which the government takes on the risk and reward of the property value alongside you. The incentive is paid back when the house is sold or in 25 years.
Who can qualify?
All these programs are geared for those seeking their first home that they plan to reside in. If you are a first time home buyer, you automatically qualify for the tax credit. To take out money from your RRSP, the amount has to be in your account for at least 90 days and you must have a written agreement in place.
The Incentive is a bit more complicated. You qualify if you meet the following criteria:
- your total annual qualifying income doesn’t exceed $120,000 ($150,000 if the home you are purchasing is in Toronto, Vancouver, or Victoria)
- your total borrowing is no more than 4 times your qualifying income (4.5 times if the home you are purchasing is in Toronto, Vancouver or Victoria).
- you or your partner are a first-time home buyer.
- you are a Canadian citizen, permanent resident or non-permanent resident authorized to work in Canada.
- you meet the minimum down payment requirements with traditional funds.
What does the phrase “first-time home buyer” mean?
All of these programs are contingent on the person or persons buying a home for the first time. You can be a first-time home buyer if:
- you have never purchased a home before.
- you did not occupy a home that you or your current spouse or common-law partner owned in the last 4 years (the 4-year period begins on January 1 of the fourth year before the Incentive is funded and ends 31 days before the date the Incentive is funded).
- you have recently experienced the breakdown of a marriage or common-law partnership.
Does addy impact the first-time home buyer aid?
The short answer is no. addy offers investments in institutional-grade commercial real estate where addy is a limited partners and its members buy shares. Members do not occupy these buildings or take out a mortgage to invest in them. What’s more, members invest relatively minimal amounts, anywhere from $1 to $1,500.
Unlike some real estate investment companies, addy does not seek out single-family homes or individual condo units as investment opportunities. Doing so would put home buyers, especially those in the younger generation, at an even greater disadvantage when trying to buy. Low supply, high demand and skyrocketing prices make it hard for the average Canadian to purchase a home – competing with a real estate investment company makes it much more difficult.
These government programs are designed to help those seeking their first home – one they intend to live on a consistent basis.
This means you can invest in our Clearview on the Park addy in Toronto and still look for a home in Toronto as a first time buyer and receive help from the government. While you’re looking for a home, you can invest to earn some passive income.