Do Couples Lose First Time Buyer Status if One Partner Bought in the Past Canada?

Do Couples Lose First Time Buyer Status if One Partner Bought in the Past? A Complex Affair

Setting out on the road to homeownership is a thrilling adventure, filled with both excitement and anticipation. This journey is particularly significant for first time homebuyers who are eager to plant their roots and establish their own personal haven. To facilitate this milestone, a suite of benefits and incentives has been put in place, specifically catering to the needs of first time buyers. Yet, what happens when a couple embarks on this journey, and only one is technically stepping onto the property ladder for the first time? This situation opens up a Pandora’s box of complexities that can significantly impact the couple’s eligibility for first time homebuyer advantages.

Unpacking the Definition: Who is a ‘First Time Homebuyer’?

The crux of this dilemma resides in the definition of ‘first time homebuyer’. While seemingly straightforward, the interpretation of this term is not as simple as it appears. By the book, a first time homebuyer is an individual who has neither owned a home nor lived in a house owned by their spouse during the last four years. This four-year period is defined from January 1 of the fourth year before the year of home purchase, right up until 31 days before the acquisition date.

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Examining the Impact: When One Partner Has Owned Before

A common predicament for many couples stepping into homeownership is when one partner has prior experience of owning a home. The question that naturally arises is, does this previous ownership rob the couple of their first time homebuyer status? According to the established rules, it indeed can. If Partner A had owned a home while being the spouse of Partner B, then the couple would not qualify as first time homebuyers. However, there is a caveat: If Partner A had owned a home before becoming Partner B’s spouse and has not been a homeowner since, they may still qualify for first time homebuyer benefits. [ 1 ]

Navigating Tax Incentives: Home Buyers’ Amount and RRSP Withdrawals

The ripple effects of one partner’s previous homeownership also impact tax benefits like the Home Buyers’ Amount and the Home Buyers’ Plan. The Home Buyers’ Amount, a tax credit, is designed exclusively for individuals who have not resided in a home owned by them or their spouse in the preceding four years. Similarly, the Home Buyers’ Plan allows a first time buyer to make a tax-free withdrawal from their Registered Retirement Savings Plan (RRSP) to finance their home purchase. If one partner falls short of qualifying as a first time buyer, the couple stands to lose these substantial benefits.

Finding the Silver Lining: Accessible Benefits Despite the Hurdles

Despite the potential dampening of the first time homebuyer status, it’s important to remember that not all is lost. Certain benefits are designed to be flexible and can be accessible even if only one partner qualifies as a first time homebuyer. The Land Transfer Tax Refund is a prime example of such an adaptable benefit. While this refund is usually aimed at first time homebuyers, even if one partner doesn’t meet the criteria, a portion of the refund can still be claimed. If you’re buying with a spouse who is not a first time buyer in Toronto, you can apply for a partial rebate of 50%.

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Concluding Thoughts: An Informed Journey to Joint Homeownership

Navigating the path to homeownership as a couple, where one partner has previously owned a home, certainly introduces complexities. The suite of benefits for first time homebuyers is indeed attractive and can bring significant financial relief. However, understanding how a partner’s past homeownership influences these benefits is vital. With awareness and knowledge of the rules, couples can effectively strategize their home buying process. They can maximize their benefits, ensure compliance, and embark on the journey to homeownership with confidence and clarity. It’s about turning the dream of owning a home into a feasible reality, regardless of the roadblocks that might appear along the way.