First-Time Home Buyer Programs in Canada

First-Time Home Buyer Programs in Canada

Table of contents

    Published 16/09/2020 14:09 EST
    Updated 21/07/2021 11:07 EST

    Buying your first home is a huge milestone and also likely among the largest financial transactions you’ll make throughout your lifetime. That’s why it’s important to get all the help you possibly can by tapping into the various programs available specifically for first-time home buyers in Canada to make the purchase a little easier on your wallet. After all, every bit helps!

    Key Takeaways
    • Several programs have been designed specifically to help lighten the financial burden for first-time home buyers
    • The programs either help with down payment or are credited sometime after the home purchase closes
    • Most first-time home buyer programs are run federally, except for the land transfer tax refund, which is a provincial program – and also municipal in the case of Toronto

    Important

    Each program has a deadline for which you must apply to receive funds/rebates

    First-time home buyer programs

    There are several first-time home buyer incentives available that were designed specifically to help lighten the financial burden for first-time home buyers. These programs will offset some home buying costs as well as help fund your down payment, which is often one of the biggest hurdles involved in buying your first home. 

    👆 Tip

    If you purchase a property in Toronto, you may be eligible for a first-time home buyer municipal land transfer tax refund in addition to the provincial one

    Following is key information about four first-time home buyer programs so you can save some money:

     

    • RRSP Home Buyer’s Plan (HBP). Under the federal government’s HBP, you can withdraw up to $35,000 ($70,000 for a couple) from your RRSPs tax- and interest-free to buy or build a qualifying home for yourself or a related person with a disability. The only time you don’t have to be considered a first-time home buyer to take advantage of the HBP is if you have a disability or you’re helping a related person with a disability buy or build a home. The new home must, however, be a better fit for the needs of the disabled person than his/her current home. You’re considered a first-time home buyer if you didn’t occupy a home that you or your current spouse or common-law partner owned in the past four years. See: What is the RRSP Home Buyers’ Plan (HBP)?
    • First-Time Home Buyers’ Tax Credit (HBTC). The HBTC is offered by the federal government to help offset closing costs associated with buying your first home. The HBTC allows you, as a first-time home buyer, to claim $5,000 on your personal tax return, resulting in up to a $750 rebate. You must apply to receive the credit on the tax return in the same year in which you purchase a home. See: Who Can Benefit From the Home Buyers’ Tax Credit (HBTC)? 
    • First-Time Home Buyers’ Land Transfer Tax Refund (LTTR). Land Transfer Tax (also known as the Property Transfer Tax or Welcome Tax) was introduced in most Canadian provinces during the 1970s (Ontario and Quebec) and 1980s (BC). It was a source of revenue for municipalities, who are forbidden from taxing such things as income, sales, etc. It’s paid to the province (or the municipality, in some instances) by the buyer of a property. In some provinces, first-time home buyers are eligible for a refund of all or part of the Land Transfer Tax. Certain metropolitan areas will have a higher Land Transfer Tax. Homebuyers in Toronto, for example, will pay double what their counterparts in Ottawa pay. See: Everything You Need to Know About the Land Transfer Tax
    • GST/HST New Housing Rebate (NHR). If you’re purchasing a newly built home from a builder, or are custom-building your own home, you may qualify for a rebate of the provincial GST or federal part of the HST that you paid on the home. Details of the rebate vary by province. The new home rebate application in Ontario, for instance, must be filed within two years of the new home closing date. The maximum Ontario new housing rebate amount for owner-built houses depends on whether you paid the HST on your purchase of the land. The Ontario new housing rebate is limited to a maximum of $24,000 if you paid the HST on the purchase of the land, and $16,080 if you didn’t.

    First-time home buyer programs by province

    While the RRSP Home Buyer’s Plan (HBP) and the First-Time Home Buyers’ Tax Credit (HBTC) are offered by the federal government to all eligible first-time home buyers across Canada, the First-Time Home Buyers’ Land Transfer Tax Refund (LTTR) is run provincially – and sometimes municipally in the case of Toronto – which means it can vary. The GST/HST New Housing Rebate (NHR) is run by the federal government with a provincial component, but it’s the same across the country.

    For qualified first-time home buyers, LTTR rebates are available in Ontario, British Columbia and Prince Edward Island. In addition, Toronto has its own rebate program. Here are the details:

    Region

    Ontario

    Toronto

    British Columbia

    Prince Edward Island

    Maximum Refund

    $4,000

    $4,475

    $8,000

    $2,000

    Home Value Restrictions

    $368,000 minimum

    $400,000 maximum

    $500,000 maximum

    $200,000

    maximum

     

    👆 Tip

    In certain circumstances, a partial land transfer tax refund may also be granted to first-time home buyers, so be sure to look into the specifics of your applicable program(s)

    Ontario Land Transfer Tax Refund

    When you buy land or an interest in land in Ontario, you pay land transfer tax. First-time home buyers may be eligible for a refund of all or part of the tax.

    To claim a refund, you must be at least 18 years old, you must not have previously owned a home or an interest in a home anywhere in the world, your spouse must not have owned a home or interest in a home anywhere in the world while he/she was your spouse, you must occupy the home as your principal residence no later than nine months after the date of conveyance or disposition, and you must be a Canadian citizen or permanent resident of Canada. If you become a Canadian citizen or permanent resident within 18 months, you may also apply for the rebate.

    In order to receive the rebate, a qualifying purchaser must apply within 18 months after the date of registration of the conveyance or the date the unregistered disposition occurs.

    Toronto Municipal Land Transfer Tax Rebate

    The Municipal Land Transfer Tax Rebate is available to Toronto first-time home buyers in addition to the Ontario Land Transfer Tax Refund. 

    To claim a refund, you must be at least 18 years old, you must not have previously owned a home or an interest in a home anywhere in the world, your spouse must not have owned a home or interest in a home anywhere in the world while he/she was your spouse, you must occupy the home as your principal residence no later than nine months after the date of conveyance or disposition, and you must be a Canadian citizen or permanent resident of Canada. If you become a Canadian citizen or permanent resident within 18 months, you may also apply for the rebate.

    In order to receive the rebate, a qualifying purchaser must apply within 18 months after the date of registration of the conveyance or the date the unregistered disposition occurs.

    British Columbia Property Transfer Tax Refund

    The British Columbia Property Tax Refund is available to first-time home buyers to help offset this cost.

    To claim a refund, you must be a Canadian citizen or permanent resident, you must have lived in BC for 12 consecutive months immediately before the date you register the property or filed at least two income tax returns as a BC resident in the last six years, you must not have previously owned a principal residence or an interest in a principal residence anywhere in the world, and you must not have ever received a first-time home buyers’ exemption or refund. 

    Prince Edward Island Real Property Transfer Tax Exemption

    The Prince Edward Island Real Property Transfer Tax Exemption is available to first-time home buyers to help offset this cost.

    To claim a refund, you must be at least 18 years old, you must be a Canadian citizen or permanent resident, you must have lived in PEI for six consecutive months immediately before the date you register the property or filed at least two income tax returns as a PEI resident in the last six years, you must not have previously owned a principal residence or an interest in a principal residence anywhere in the world, and you must not have previously obtained a first-time home buyer’s exemption. 

    What about Quebec?

    Unfortunately, there are no land transfer tax rebates for first-time homebuyers in Quebec at the moment, so you would have to pay the full land transfer tax amount.

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