Should First-time Homebuyers in Ontario Consider Condos?
So you are in a place to strongly consider buying your first home. Congratulations! I'm sure you're already aware of the incentives first-time homebuyers have access to in Ontario, but here is a short breakdown.
Land Transfer Tax
A land transfer tax is the tax paid when purchasing land. In Ontario, new homebuyers can receive an LTT refund of up to $4,000. There are a few more nuances involved. Like the home's total cost or if you're buying in Toronto or elsewhere in Ontario. Make sure you know the details of this tax and your potential rebate.
Canada's First-Time Home Buyer Incentive
The Government of Canada has provided this incentive that allows first-time homebuyers to share a part of their new home's ownership with the government. However, it does have caveats. You must have an annual income of $120,000 or less and the mortgage and incentive amount can't be more than four times your yearly qualified income.
RRSP Home Buyers' Plan
Created in 2019, this incentive allows first-time buyers to withdraw up to $35,000 tax-free from their RRSPs to buy or build a home. However, before you drain your accounts, consider that the amount you take out must be repaid over the next 15 years.
Should First-time Homebuyers purchase a Condo or House?
The average square foot of a single-detached house in Ontario is 1,520 square feet. Comparatively, the average size of a condo is about 895 square feet. So sure you're ready to buy a house, but don't forget you have to fill that house.
Buying a condo as your first home means you get the pride and delight of being a homeowner without worrying about some of the stressors house owners experience. There are fewer maintenance quirks you have to encounter, and there's a favourable ratio between repairs the condo board has to provide and repairs you have to sort out.
What about the amenities?
Perhaps a house with a pool is out of your price range, but if you were to purchase a condo in a facility that houses a pool or a spa. You are set whenever you want! In addition, there's more security and peace of mind, which means going on vacation doesn't leave an empty homestead where just anyone can see you're not home. Moreover, being the condo owner means you have voting rights on decisions that will impact you and your unit.
Making a big decision like buying your first home means you also have to examine what might not be great about buying a condo. Sure, you don't have to worry about as much maintenance and repair. But maybe the repair schedule isn't as fast as you'd like or as fast as you'd be able to. Perhaps you have a gym membership elsewhere and don't utilize the pool in your building. A condo is smaller than a house, which isn't appealing to some homebuyers, and a big one: special assessments. You may have to forgo some aesthetic decisions because it doesn't match the style set out by the condo board.
Not all Condos are the same
Consider the Condo Corporation you are going to be tying yourself to and if you can live with their modus operandi. It's a big decision and one that doesn't need to be rushed.
Ontario is a vast province, and the real estate market reflects that. With prices varying across Ontario, one fact remains. Condos are less expensive than semi-detached and detached homes. Once you weigh in all your options as a first-time home buyer and your incentives, you can feel confident that the decision you make will be the best one.
