Municipalities need revenues to pay their employees and to provide services to their citizens, and the primary source of obtaining and increasing that revenue is through property taxes. Therefore, municipalities apply a variety of imaginative approaches to attracting new residents. Provincial and federal governments also offer home ownership programs, however from a perspective that is primarily focused on boosting the economy, particularly through residential construction.
Let’s take a look at what’s out there.
There are three types of government assistance:
- Tax incentives (i.e. HBP, tax credits);
- Financial assistance to reduce the purchase price;
- Reductions in premiums for home or mortgage insurance.
Home Buyers' Plan (HBP)
For several years now, the federal government has been facilitating property ownership through the HBP, a plan which allows every taxpayer to withdraw up to $25,000 from their registered retirement savings plan (RRSP) for the purpose of acquiring a property. However, this program is subject to repayment obligations which buyers must begin to repay in the second year following their RRSP withdrawals. A buyer has 15 years to reinvest all of the funds withdrawn from an RRSP, without interest.
First-time Home Buyers’ Tax Credit (HBTC)
The federal government offers a tax credit for the purchase of a first home. The amount for a qualifying home is $5,000 and the credit is applicable to single-family homes, townhouses, semi-detached houses, mobile homes, condos and apartments in a duplex, triplex, quadruplex or building. A share in a housing co-op is also eligible, provided that it gives you the right to own housing in the country. A disabled person who qualifies for the disability tax credit may also access the HBTC.
A first owner of a Novoclimat 2.0 certified home receives $1,000 in funding from the Department of Energy and Natural Resources. The buyer will also receive a 10% discount on insurance premiums. These energy efficient homes can save up to 25% on heating costs.
A person who acquires an energy-efficient unit (a home, a unit in a small residential complex or a condo in a high-rise building) will receive a 15% or 25% reimbursement of mortgage insurance premiums as part of a program administered by CMHC. The 15% premium refund applies to homes built to the standards of Novoclimat, LEED Canada, Energy Star, Built Green Canada and certain other provincial standards outside of Quebec. The 25% rebate applies to homes built in accordance with R-2000 standards. Energy-efficient homes not built under those standards may also be eligible, however they must be assessed by an energy advisor accredited by Natural Resources Canada. These homes must achieve an EnerGuide rating of between 82 and 85 to receive a 15% premium refund, and a rating of 86 to 100 for a 25% refund. Similar standards are required for a condo acquired in a residential tower. Premium refund applications must be submitted by the borrower within two years of the closing date of the mortgage.
Most major cities in the Province of Quebec (Montreal, Quebec, Laval), as well as some smaller cities, offer home buyer programs. Some of these programs are designed specifically to attract families, but they come in a variety of forms, including:
- Purchase credits;
- Interest-free loans;
- Remittance of real estate transfer taxes;
- Property tax credits.
Programs in Montreal
Montreal’s Home Ownership Program applies to both new and existing properties. In respect to new properties, if it is also a first-time acquisition, a buyer is entitled to a refund of the transfer tax (also known as a ‘welcome’ tax). A lump sum of between $2,250 and $6,250 will also be awarded to future occupants, with the amount varying according to the value of the acquired property and the nature of the occupants. Example: A person living alone who buys a residence up to a maximum value of $200,000 will be entitled to an amount of $2,250. A family with at least one child under the age of 18 will be entitled to the maximum amount of $6,250, provided that the family acquires a property up to a maximum value of $360,000, with at least 1,000 square feet of interior space. The same family can also benefit from six months of free public transit with the purchase of an annual OPUS card and two Accès Montréal cards.
The Société d'habitation et de développement de Montréal (SHDM) also offers a program called Accès Condos. This program offers a purchase credit for accredited Accès Condo projects, amounting to 10% of the sale price of a divided co-ownership. A down payment of $1,000 is required to access this credit. For example, if you purchase a $200,000 Accès Condos accredited unit, with a minimum down payment of $1,000, you will be entitled to a purchase credit of $20,000 (10%), which will reduce your mortgage to $179,000. However, when reselling the condominium, you will have to reimburse the $20,000 to the SDHM, plus 10% of the value added associated with the sale. In other words, if the value added is $40,000, the amount to be reimbursed will be $4,000.
Quebec City Family Access Program
In Quebec City, the Family Access Program allows families with a gross family income between $90,000 and $110,000 (eligible income depends on the number of children) to receive an interest-free loan, known as an “access credit”, equivalent to 5% of the purchase price of a home accredited by the program. The purchased property must be either a single family dwelling (single, row or semi-detached) or a new divided co-ownership. If the property is resold, 5% of the value added must be reimbursed to the lender.
Laval Home Ownership Program
The City of Laval’s Home Ownership Program offers a transfer tax rebate up to $750 for property acquired in one of the older sections identified by the city.
Saint-Jean-sur-Richelieu Property Access Program
This program applies to a restricted area of Old Saint-Jean and is intended for a first-time buyer occupant acquiring a condominium unit in a building of at least six units. The program offers a maximum rebate of $1,000 on real estate transfer taxes, as well as a 100% credit on property taxes for the first year following transfer of ownership. In the second year, the credit applied is 50%, while the third year credit drops to 25%.
Property Tax Credits
Several Quebec municipalities offer tax credits to newcomers who acquire new property in their territory. Most of these programs are limited time offers and the majority are offered by small or medium sized municipalities in remote areas. The credit is generally offered over a period of two or three years, often decreasing after the first year. Example: First year, 100% credit; Second year, 50% credit; Third year, 25% credit. Some municipalities offer the credit to stimulate housing construction in devitalized sectors.
Tax credits can also be used to attract families (see Shawinigan program below). The following is a non-exhaustive review of tax credits offered by several Quebec municipalities.
Property Tax Refund – City of Gatineau
As part of an urban development program aimed at building 4,000 new units in downtown Gatineau, the city is offering a tax refund of 35-90%, depending on the sector. In Sector 1, which is the largest, the reimbursement offered is 75%, or 90% if it is a LEED certified home. In the smaller Sector 2, the rebate is 35%, or 50% if it is a LEED certified home. The duration of the reimbursement varies according to the category of the constructed building (3-7 floors and more).
Property Tax Credit – City of Nicolet
In three areas of Nicolet targeted for revitalization (Downtown, Uptown and Port Saint-François), purchasers of any new home built on vacant land will qualify for a property tax credit. The credit is higher for LEED or Novoclimat certified homes and can reach up to $7,000 over three years. A supplement of $700 is also available for additional housing in excess of the first, in buildings with two or more units. This program ends on December 31, 2018.
Tax Credit – City of Sainte-Hyacinthe
If you acquire a new residence in this city with a property valuation of at least $50,000, you are eligible for a tax credit. Single-detached, duplex, triplex, multi-unit dwellings of 4 units or more and condos are eligible, and the credit is granted for three years following the date of completion of work. An additional credit is available for LEED certified homes, which varies according to the level of certification (First level certification, the credit is extended by 6 months; Silver level certification, the extension is 12 months; Gold level certification, the credit is extended by 18 months; Platinum level certification, the credit is extended by 24 months).
Property Tax Credit - Town of Huntingdon
In southwestern Quebec, the small town of Huntingdon (Pop. 2,457 - 2011) offers a property tax credit over a four-year period. This city, whose population has declined by 400 since 1991, is looking to curb the exodus and attract new residents. The incrementally decreasing credit is granted as follows: 100% in the first year, 75% in the second year, 50% in the third year and 25% in the fourth year.
Property tax credit – Town of l'Islet
This small town of 4,000 inhabitants (2014), located in Quebec’s Chaudières-Appalaches region, offers a three-year tax credit to new buildings constructed in a specifically targeted revitalization area. The credit is based on a somewhat confusing calculation, but the municipality is also offering an additional $5,000 in financial assistance to future homeowners who establish themselves within the urban perimeter of the city.
Property Tax Credit – Municipality of Louiseville
Until December 31, 2017, the municipality of Louiseville is offering a generous tax credit for new constructions of two types. The first type relates to new residences and provides a 100% credit for the first two years, with a 50% credit in the third year. The second type relates to new construction or expansion of a building with 25 units or more within an area identified by regulation. The credit applies to 100% of the tax increase resulting from revaluation of the building for three years. Using the same calculation, the credit is reduced to 50% in years 4 and 5.
Property Tax Credit – City of Sorel-Tracy
The City of Sorel-Tracy offers a three-year ‘green’ tax credit for new constructions with Novoclimat 2.0 certification, which extends to five years for homes that achieve LEED certification. According to Richard Paul of the planning services department, Sorel-Tracy is offering a three-year tax holiday on the value of buildings with Novoclimat 2.0 certification, and a five-year break for LEED certified homes. He admits, however, that there have not been any such constructions in the municipality since the program was implemented.
Property Tax Credit - Saint-Nazaire d'Acton
The municipality of Saint-Nazaire d'Acton offers a tax credit to new single-family and multi-family dwellings and condos. In the first year, the credit amounts to 100% of the difference between the amount of property taxes that would be due if the assessment of the building had not been modified and the amount of the taxes actually due. In the 2nd year, the credit decreases to 50% of the same calculation.
Property tax credit - Lebel-sur-Quévillon
In northern Abitibi, the municipality of Lebel-sur-Quévillon passed a by-law in June 2016 authorizing tax credits. There are two types of credits available: New buildings built on revitalized residential land, with service, are eligible for a property tax credit of 75% in the first year, 55% in the 2nd year and 30% in the 3rd year. New buildings constructed on undeveloped residential land are eligible for a credit of 65% for the first year, 45% for the second year and 25% for the third year.
Property Tax Credit - Baie-des-sables
This small municipality, within the La Matanie Regional County Municipality, is offering a tax credit for any home built in a designated revitalization area in 2017 or 2018. The program ends on December 31, 2018. The credit, valid for one year, amounts to 100% of the difference between the amount of property taxes that would be due if the assessment of the building had not been modified and the amount of the taxes actually due.
Property Tax Credit – City of Amos
The city of Amos, in Abitibi, offers a tax credit for two categories of residential buildings: 1-3 unit buildings and 4-39 unit buildings. For the first category, the credit applies to 100% of the taxes for a duration of three years. For the second category, the credit also amounts to 100%, but is valid for a period of five years. Qualifying homes must be built before December 31, 2020.
Family Ownership and Assistance Program - Métis-sur-Mer
In the municipality of Métis-sur-Mer, in the Gaspé, a program of home ownership and assistance for families is in force until December 31, 2017. The program aims to help new and established families to acquire new or existing properties in the municipality. For new young families, the acquisition of a new residence earns a 100% tax credit for the first three years following the purchase, up to a maximum of $2,000 per year. For established families, the tax credit is 100% for the first two years following the purchase of the residence, up to a maximum of $1,500 for each of the two years. Finally, if a child is born or adopted during the program, an additional credit of $350 per child is being offered to families.
Family Ownership and Assistance Program – City of Shawinigan
This program, in effect since 2009, aims to attract new families to the city. For first-time buyers of a new or existing home, a 50% tax credit is available for the first two years. Additionally, a tax credit of $500 is available for each child aged 17 and under. Other benefits include free passes for leisure activities and public transportation.
Read: new home taxes.
Links to learn more about the programs:
- For the Home Buyers’ Plan, read the following document.
- For more information on the First-time Home Buyers’ Credit (HBC)
- For information on the Novoclimat program.
- For information on CMHC’s Green Home program.
- For information on the City of Montreal’s Home Ownership Program.
- For information on the Accès Condos program, administered by the Société d'habitation et de développement de Montréal (SHDM).
- For information on Quebec’s Family Access Program (French Only).
- For information on the City of Laval’s Home Ownership Program.
- For more details on the City of Gatineau’s Property Tax Refund program.