OHOSP – Ontario Home Ownership Savings Plan
Besides the RRSP funds, you can use the Ontario Home Ownership Savings Plan (OHOSP) to be used for the same purpose of buying a home. These can provide a $2,000 per year tax credit contribution to your plan. However, the catch here is that such contributions must have been made before May 18, 2004. No new OHOSP can be opened after that. The qualification criteria for OHOSP rely solely on the annual income. A person must have annual earnings below $40,000 and a couple must have combine income below $80,000 per annum. The lawyer will receive the funds through the applied bank near the closing date and as per the closing costs. All OHOSP accounts are required to be used by May 18, 2011. Else they have to be closed.
OHOSP and Land Transfer Tax Refund (for New/Resale Properties)
Under OHOSP, the Ontario Land Transfer Tax has to be paid on immediate completion of the house purchase. The application for a refund must be made by the purchaser upon the deal closing. As per the Ontario Law, if your purchase plan was set before 1 January 1994 and your house’s purchase price is below $200,000, you are eligible for a complete refund of the Land Transfer Tax applicable on the purchase price. This process is not valid for the OHOSP’s that are availed after 1 January 1994. Similarly, in the Toronto area, you can receive a full tax refund if the plan setup date is before the 1st of January 1994. Here, if the purchase price of your property is below the $150,000 you receive a full amount refund of Land Transfer Tax. On the other hand, if the purchase price is $175,000 you are entitled to a 50% amount. No land transfer tax refund is available in case the price of your home is greater than $200,000.