The First-Time Home Buyer’s Tax Credit (HBTC) allows first time buyers in Canada a small refund on a portion of their tax return. While it is not a huge amount of money, it’s available to most first time buyers and is a relatively straightforward tax credit to get, so it’s worth looking into. In this article, we’ve outlined what the HBTC is, how much it is, and other first time home buyer incentive programs in Canada.

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Key Takeaways

• The First-Time Home Buyers’ Tax Credit allows first-time home buyers to claim $5,000 on personal tax returns, resulting in a maximum $750 rebate
• You can also qualify for the First-Time Home Buyers’ Tax Credit and not be buying a home for the very first time if you’re eligible for the disability tax credit or you acquired the home for the benefit of a related person who’s eligible for the disability tax credit
• Ontario, British Columbia and Prince Edward Island offer first-time home buyers refunds of all or part of the Land Transfer Tax. And, in Toronto and Montreal, you can even take advantage of an additional Municipal Land Transfer Tax Rebate

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Important: You must apply to receive the credit on the tax return in the same year in which you purchase a home.

What is the First-Time Home Buyer’s Tax Credit?

In Canada, the Home Buyers’ tax credit (otherwise known as the Home Buyers’ amount) is a federal program to make homeownership more accessible for some first time buyers. The program gives eligible first-time home buyers a $5,000, non-refundable income tax credit on qualifying homes, resulting in up to a $750 rebate in your tax return in the year you buy your home.

Tip: The Home Buyer’s Tax Credit (HBTC) is calculated by applying the lowest personal income tax rate in Canada (15%) to $5,000. 15% of $5000 = $750.

Who can claim the First-Time Home Buyer’s Tax Credit?

You are eligible to claim the the Home Buyer’s amount if the following points apply:

• You or your spouse/common-law partner acquired a qualifying home.
• You are a first-time buyer. This means you did not live in another home owned by you or your spouse/common-law partner in the year of the acquisition of this home, or in any of the four preceding years.
• You or a related person with a disability will occupy the home, as a principal place of residence no later than one year after it is acquired

Does My Home Qualify for the First-Time Home Buyer’s Tax Credit?

A qualifying home is a residential property that satisfies the following requirements:

• A home that is registered in your, or your spouse’s/common-law partner’s name and located in Canada. This includes both existing homes and homes under construction.
• Is one of the following types of home:
  • single-family houses
  • semi-detached houses
  • townhouses
  • mobile homes
  • condominium units
  • apartments in duplexes, triplexes, fourplexes, or apartment buildings
  • A share in a co-operative housing corporation that entitles you to own and gives you an equity interest in a housing unit located in Canada also qualifies. (A share that only gives you the right to tenancy in the housing unit does not qualify.)

You can also qualify for the tax credit if you aren’t a first-time buyer, if either of these apply:

• You’re a home buyer who’s eligible for the disability tax credit 
• You acquired the home for the benefit of a related person who’s eligible for the disability tax credit.

Claiming the Tax Credit for People with Disabilities

If you are eligible for the disability tax credit in the year in which the home is acquired, or you acquired the home for the benefit of someone related to you who is eligible for it, then you may qualify for the HBTC, even if you aren’t a first-time buyer. There are a couple of stipulations, which are:

• The purchase must be made to allow the person with the disability to live in a home that is more accessible or better suited to their needs.
• You must intend to occupy the home, or you must intend that the related person with a disability occupy the home, as a principal place of residence no later than one year after it is acquired.

To apply for the HBTC for people with disabilities, you or a related person must be eligible to receive the disability tax credit, then apply for the HBTC as normal on line 31270 of your income tax return in the year you bought the home.

How do I claim the First-Time Home Buyers’ Tax Credit?

To apply for the first-time home buyer’s tax credit, enter $5,000 on line 31270 of your income tax return, if you are not splitting the amount with your spouse or common-law partner. (You and your spouse or common-law partner can split the claim but the combined total cannot be more than $5,000.) Keep all your supporting documents in case the CRA needs to see them later on.

What other tax credits am I eligible for?

There are a number of other tax credits and first time home buyer incentives in Canada.

First-Time Homebuyer Incentive

The First-Time Homebuyer Incentive is a shared-equity mortgage with the Government of Canada, which helps homeowners pay a larger down payment.  The effect of the larger down payment (all other things remaining equal) means a smaller mortgage, and ultimately, lower monthly costs.

The First-Time Homebuyer Incentive offers homeowners one of the following:

• 5% or 10% for a first-time buyer’s purchase of a newly constructed home
• 5% for a first-time buyer’s purchase of a resale (existing) home
• 5% for a first-time buyer’s purchase of a new or resale mobile/manufactured home

Shared equity means the government shares in both the upside and downside of the property value, up to a maximum gain or loss of 8% per year (not compounded) on the incentive amount, from the date of advance to the time of repayment.

Land Transfer Tax Rebate

In Ontario, British Columbia, and Prince Edward Island, first-time home buyers may be eligible for a refund of all, or part of their Land Transfer Tax. There is also a land transfer tax rebate available for first-time homebuyers in the city of Toronto.

Here’s a breakdown of each province and city’s rebates as of 2022:

Region	Maximum rebate	Maximum Home Value Covered	Partial refund available?
Ontario	$4,000	$368,333	50% refund if spouse does not qualify
British Columbia	$8,000	$500,000	Partial refund for homes valued between $500,001 – $524,999
Prince Edward Island	$2,000	$200,000	No
Toronto	$4,475	$400,000	50% refund if spouse does not qualify

GST/HST New Housing Rebate

The GST/HST New Housing Rebate helps provide financial relief on General Sales Tax / Harmonized Sales Tax on newly built housing, which can help Canadians save thousands on the cost of a new-build home.

The new housing rebate is equal to 36% of the GST that all buyers pay when buying a new home in Canada, up to a total of $6,300 and valid on homes with a fair market value of $350,000 or less. If you are buying a home that costs more than this amount but less than $450,000, you can still apply for a partial rebate. In HST provinces (New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island) the rebate is 36% of the federal component (GST) of the tax. There may be additional provincial rebates available for the remainder of the HST, depending on where you live.

Home Buyers’ Plan

The Home Buyers’ Plan is a program that lets Canadians withdraw from a registered retirement savings plan (RRSP) to buy or build a qualifying home, either for themselves or a related person with a disability. The Home Buyers’ Plan (HBP) lets first time home buyers borrow up to $35,000 from their RRSPs for a down payment, tax-free. If you’re purchasing with someone who is also a first time home buyer, you can both access $35,000 from your RRSP for a combined total of $70,000. Because the HBP is a loan, it must be repaid within 15 years.

Frequently Asked Questions (FAQ)

Final Thoughts

First-time buyers have a lot on their plate. With rising interest rates and the cost of housing at an all-time high in Canada, taking advantage of every possible tax credit, federal, and provincial program available is one way to offset the cost of living. When added up, first-time homebuyers can save thousands of dollars in taxes, and find more affordable ways to pay their down payments, and buy their first home. 

At nesto, we believe in providing the best rates available to Canadians. We’re also here to help you navigate the process of buying a home and finding the best mortgage available. If you’re ready to start your journey to homeownership, give one of our trained advisors a call today.

Other articles in this guide: “First-Time Home Buyer Mortgage Guide”

• What is the RRSP Home Buyers’ Plan (HBP)?
• First-Time Home Buyer Land Transfer Tax Rebates Across Canada
• First-Time Home Buyer Programs in Canada
• First-Time Home Buyer Grants in Canada
• First-Time Home Buyer Loans in Canada
• Who Can Benefit From the Home Buyers’ Tax Credit (HBTC)?

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