First-Time Home Buyer Programs & Rebates

It’s important to become familiar with different programs established to help first-time home buyers if you fall in that category. You need to know how to get through the purchasing process and possibly save yourself some money, whether it’s a tax-efficient method of funding your down payment, a rebate you may qualify for, or the minimum you must put down for your home purchase.
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RRSP Homebuyers’ Plan for first time home buyers

You might qualify for the government’s Home buyers’ Plan if you have not bought a house during the last four years (or resided in a house owned by a spouse during that time). You can borrow as much as $25,000 from your Registered Retirement Savings Plan (RRSP) to use toward your down payment, and it’s tax-free. In order to use this option, you must have enough funds in your RRSP at least 90 days prior to purchasing your home. Early drawings from RRSPs are generally regarded as taxable income, so this plan is beneficial to Canadians. Home buyers are exempt from being taxed once the money is taken under the plan. However, they must start paying back the RRSP loan after two years over a maximum period of fifteen years.

Special Grants and Tax Credits for First-Time Home Buyer’s

If you’re buying a home for the first time, know that different tiers of the government offer you grants that can make buying a home economical. Here are the grants you can make use of for assistance.

First-Time Home Buyer’s Tax Credit

According to the prevailing taxation rates, the Home Buyers’ Tax Credit stands at a rebate of around $750 for people buying a home for the first time. First announced by the federal government in the budget for 2009, the grant makes it possible for you to economize on some of the purchase expenses such as home inspections, land transfer taxes, and applicable legal fees. Here are the conditions you need to meet.

  • You need to apply for the non-refundable credit within the purchase year.
  • If you have bought the home in partnership with your spouse, friend, or partner, the combined credit you both claim cannot go above $750.
  • The house you buy should be “qualified” or a new or existing property in Canada.
  • You must plan to move into the house within a year of purchasing it.
  • Homes can be condos, semi-detached, detached, mobile homes, or any other.
  • You must register the property on your own or spouse’s name. At the time of submitting your claim, you need to provide the complete paperwork needed.
  • You should not be a homeowner for 4 years before you claim the rebate.
  • You should not have lived in a home belonging to your spouse in a 4 years’ period.

Land Transfer Tax Rebate

Residents of the City of Toronto and provinces such as Prince Edward Island, British Columbia, and Ontario can qualify for a refund or rebate on a portion of the land transfer tax they pay when buying a house for the first time. If you live in Toronto, you can receive the rebate in addition to the refund available to residents of Ontario.

RRSP Home Buyer’s Plan

Should you withdraw any amount from your RRSP, you’ll have to pay an income tax on it since it is considered taxable income. However, if you’re making the withdrawal to buy a house for the first time, the government allows you to borrow up to $25,000. Here are some conditions you must meet.

  • You should not be a homeowner in the last 4 years before the purchase.
  • You should not have lived in a home owned by your spouse in the last 4 years.
  • The borrowed amount from your RRSP must be repaid.
  • You are required to begin making payments towards the mortgage 2 years after the purchase of the property. The mortgage should be cleared within 15 years.

GST/HST New Housing Rebate

As a Canadian citizen, you can claim a refund on the GST or HST that you have paid to the federal government when buying a new home. You can also claim a rebate for making renovations to an existing property or reconstructing property that was destroyed by fire on condition that the property was your primary residence. The home can be a modular home, floating or mobile home. As a resident of Ontario, you can claim a rebate on the provincial portion of the HST you paid when buying or renovating your home.

The federal government has initiated the First-time Home Buyers’ Tax Credit to help Canadians buying their first homes. Included in the ‘Canada’s Economic Action Plan,’ the program was intended to assist new homeowners with closing costs. These costs may cover land transfer taxes, home inspections, and legal expenses.

Here’s some additional information you may need:

  • At prevailing taxation rates, the Home Buyers’ Tax Credit allows first-time homeowners a rebate of $750.
  • You must claim the nonrefundable credit in the year when you purchase the house.
  • If you’re buying the property in partnership with a friend, partner, or spouse, the total of both your claims cannot go over $750.
  • You or your spouse should intend to buy a “qualified” property.
  • Registration of the property should be in your or your spouse’s name.
  • You should own home for the first time in the last 4
  • You cannot have lived in a property that your spouse owned in the last 4
  • You must present the necessary paperwork showing that you own the house.

Qualification Criteria for the First-time Home Buyers’ Tax Credit

To be called a “qualified” property, the house must meet certain conditions:

  • The property must be located in Canada.
  • It can be an existing or newly-constructed property.
  • Apartments, condos, mobile homes, semi, and single homes are all included in the scheme.
  • The property can be a share in a co-operative housing corporation according to which you receive ownership of the house.
  • You must intend to move into the house within 12 months of buying it.

Home Buyers’ Tax Credit for the Physically Challenged

If you’re physically challenged and qualify for a disability amount in the tax return you file in the year when you purchase the home, you can claim the Home Buyers’ Tax Credit. You need not be a first-time homeowner and can request for a rebate if the home is designed to meet your specific requirements and you intend to move into it within 12 months of the purchase.

Land Transfer Tax Rebate for First Time Homebuyers

Homebuyers in the provinces of Prince Edward Island, British Columbia, and Ontario can avail of the land transfer tax rebate according to their regulations. Each province allows a specific rebate according to the location and value of the property. The rebate can also depend on whether or not the owners are first-time homebuyers. Depending on certain conditions, residents of the city of Toronto can avail of a rebate of a maximum of $3,725 on the municipal land transfer tax.

GST/HST New Housing Rebate

According to the GST/HST New Housing Rebate, you can claim a rebate on a part of the sales tax. Here are certain conditions:

  • You must buy a home under construction.
  • You must conduct extensive renovations on your existing residential property.
  • You can claim rebate only if the value of the purchased property is $450,000 or less.
  • The rebate amount will depend on the purchase price of the home.
  • All qualifying Canadians can claim this rebate even if they’ve owned residential property before.

Land Transfer Tax Rebate for First Time Home Buyers

If you live in Ontario, British Columbia, or Prince Edward Island you can get a refund on a portion of land transfer taxes paid. Along with the provincial rebate, City of Toronto residents is also entitled to get a refund of the city’s land transfer tax. This rebate only applies if you’re a first-time home buyer, and the amount you get back depends on your location.

Tax Credit for First-Time Home Buyers

Since 2009, first-time home buyers in Canada have been given the chance to recoup a portion of the costs related to their purchase. Inspections, legal fees, and other costs of a similar nature can be offset using this credit. This tax credit is non-refundable and is about $750.

Rebate of GST/HST for New Housing

Canadians who significantly refurbish an existing home, purchase a recently built home, or reconstruct a home previously devastated by fire can claim this rebate. Homeowners would normally pay GST/HST on any purchases they make in all three cases. These Canadians can get a rebate on the GST paid for a renovation or the purchase of a new home.

Land Transfer Tax Rebate for First Time Home Buyers

As a homebuyer living in the provinces of Prince Edward Island, British Columbia, and Ontario or in the city of Toronto, you can avail of a land transfer tax rebate. A facility available to people buying a home for the first time, you can claim a partial refund on the land transfer tax you pay.

Ontario Land Transfer Tax

If you’re buying a home in Ontario for the first time, you can request for a rebate or refund equivalent to the full amount that you pay as land transfer tax that may be a maximum of $4,000. However, the Ontario Land Transfer Tax Refund for First-Time Homebuyers facility is subject to certain conditions:

  • You need to be at least 18 years of age.
  • You need to move into the home within a period of 9 months after buying it.
  • You need to be buying a home for the first time.
  • If you’re married, your spouse must also be a first-time homeowner during the time of your marriage.

While you can get all the information you need at the  Land Transfer Tax Refund for First-Time Homebuyers website, here are some other factors you need to know:

  • According to the Ontario land transfer tax rates, a rebate equivalent to the complete tax amount can be claimed on homes of the value of a maximum of $368,250.
  • If the house you’re buying is more than $368,250 in value, you can avail of a rebate but you’ll have to pay the remaining land transfer tax.
  • If you are buying the house as a married partner and only one of you can avail of the rebate, you’ll need to pay only 50% of the applicable rebate.
  • You have a window of 18 months from the time the house is transferred in your name to apply for the rebate.
  • You can request the assistance of your real estate lawyer to submit the necessary application along with the required paperwork.
  • File your application for the land transfer rebate online or download and submit a filled Ontario Land Transfer Tax Refund Affidavit for First-Time Purchasers of Eligible Homes form.

Toronto Land Transfer Tax

As a resident buying a home for the first time in Toronto, you can avail of a rebate equivalent to the complete amount you paid towards municipal land transfer tax that is up to $3,725. You can also apply for both the Ontario rebate and Toronto rebate. However, you need to meet certain conditions to apply for the Toronto Municipal Land Transfer Tax Rebate for First-Time Purchasers. They are:

  • You need to be at least 18 years of age.
  • You need to move into the home within a period of 9 months after buying it.
  • You need to be buying a home for the first time.
  • If you’re married, your spouse must also be a first-time homeowner during the time of your marriage.

Do visit the Municipal Land Transfer Tax Rebate website for all the information you need. Here are some of the factors you need to be aware of:

  • According to the Toronto land transfer tax rates, the rebate is applicable on the complete tax amount on homes with a maximum value of $400,000.
  • If your home price is over $400,000, you can qualify for the rebate but you’ll have to pay the remaining land transfer tax.
  • If you’re buying the property along with your spouse but only one of you is a first-time homeowner, you can avail of 50% of the rebate.
  • If you meet the necessary conditions, your real estate lawyer can apply for the rebate online by Teraview at the time of registering the transfer deed.

British Columbia Land Transfer Tax

Under certain conditions, residents of British Columbia buying a home for the first time can apply for a rebate equivalent to the full amount of the land transfer tax they pay up to $7,500.

  • You need to be a permanent resident or citizen of Canada.
  • You need to live in BC for 12 consecutive months in the time just before you register your home. Alternatively, in the last 6 years, you need to have filed at least two income tax returns in B.C.
  • You need to be a first-time homeowner
  • You need to be a first-time recipient of the homebuyers’ exemption or refund.

You can find all the information you need at the First Time Home Buyers’ Program website. Here are some factors you need to be aware of:

  • According to the British Columbia property transfer tax rates, the rebate can be an equivalent of the complete tax amount on homes of a maximum of $475,000 in value.
  • If you’re buying a home of value more than $475,000 to $499,999, you can avail of only a part of the rebate.
  • If the home price is $500,000 and above, you’ll need to pay the complete applicable land transfer tax and no rebate is available.
  • If you meet the necessary conditions, your real estate lawyer will assist you in applying by way of the First Time Home Buyers’ Property Transfer Tax Return form at the time of registering the transfer of the home.
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Vik Palan

Chief Editor - Ratestead.ca

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