Who Qualifies as a First-Time Home Buyer in Alberta?
Buying a home for the first time can be an exciting yet challenging milestone, but first-time home buyer incentives can make this journey smoother. To qualify as a first-time home buyer in Alberta, you have never owned a home, you or your spouse haven’t occupied a qualifying home, or you’ve recently experienced a divorce or common-law breakdown.
Eligibility Criteria for First-Time Home Buyers
If you're looking to purchase your first home in Alberta, there are specific criteria you'll need to meet. In the simplest terms, you must not have owned property before to be considered a first-time home buyer.
However, there are other criteria and exceptions for first-time homebuyers in Alberta, including:
Must be a Canadian citizen or permanent resident and at least 18 years old
Must not have owned a property in the last 4 years or more
Your spouse/partner must not have occupied a property you owned in the last 4 years
Must be recently divorced or separated from a common-law partnership
Must be purchasing a primary residence (not a rental property or property for someone else)
If you have a spouse or common-law partner, these rules would apply to both of you. So, if you are married and your spouse has occupied a home they owned in the last four years, you would not qualify as a first-time home buyer.
Property Qualifications in Alberta
When buying a home in Alberta, certain qualifications apply to properties for first-time buyers. The property must be residential and intended to be occupied as your principal residence.
Principal residence means it's the home where you'll live most of the time. So if you are buying a house with the intention to rent it out, you would not qualify for first-time home buyer incentives.
Programs for First-Time Home Buyers in Alberta
First Home Savings Account (FHSA)
The First Home Savings Account (FHSA) allows you to save for your first home. Contributions to this account are tax-deductible, up to a set limit each year. Earnings on the savings grow tax-free, making it easier to accumulate funds.
When you withdraw money for your first home purchase, these withdrawals will be tax-free, making this a beneficial way to boost your savings.
RRSP Withdrawal for First-Time Home Buyers (The Home Buyers’ Plan)
The Home Buyers’ Plan enables you to borrow from your Registered Retirement Savings Plan (RRSP) for your first home purchase. You can withdraw up to $60,000 without paying taxes, which can be a considerable help with a down payment.
Repayment back into your RRSP must begin in the second year after withdrawal and can spread over 15 years. It's essential to plan for these repayments to avoid unexpected taxes.
Tax Credits & Rebates
There are several tax credits and rebates aimed at first-time home buyers in Alberta. The First-Time Home Buyers' Tax Credit provides a non-refundable tax credit, potentially reducing your tax bill by up to $750 or more, which can help offset purchase costs.
Additionally, the GST/HST New Housing Rebate may be available for new home purchases, reducing your upfront costs considerably.
Next Steps for First-Time Home Buyers
Buying your first home is a big step, but it doesn’t have to be daunting with the right advice. The first step to any home-buying journey is getting pre-approved for a mortgage.
A pre-approval tells you what price point to look at and gives you a better idea of what kind of down payment you’ll need. Plus, if you get your pre-approval from a mortgage broker, they will compare rates from a variety of lenders for you, so you get the best rate possible.
Contact the mortgage brokers at Spire Mortgage to get the best advice for first-time home buyers. We’ve helped countless first-time home buyers just like you start their home ownership journeys.
