Buying a home for the first time is a significant life event, and the Canadian government offers various programs to ease the financial challenges involved. These initiatives are aimed at making homeownership more accessible for first-time buyers by providing financial support and tax benefits.
Home Buyers’ Plan (HBP)
The Home Buyers’ Plan (HBP), administered by the Canada Revenue Agency (CRA), allows individuals to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) to purchase or construct a home. This program can also be used to help a relative with a disability. The amount withdrawn must be repaid to the RRSP over a period of 15 years.
To be eligible for the HBP, you need to meet the following criteria:
- You must be purchasing your first home.
- You must be a Canadian resident at the time you withdraw the funds and remain so until you buy or build the home.
- A written agreement for the home purchase or construction is necessary.
- The home must serve as your primary residence or that of a related person with a disability, within a year of the purchase or completion of construction.
Further details on the process of participating in the HBP, including withdrawing and repaying funds, can be found on the CRA’s official website.
Ontario Land Transfer Tax Refund
In Ontario, purchasing a home or land typically incurs a land transfer tax. For properties located in Toronto, an additional municipal land transfer tax applies.
First-time homebuyers in Ontario may qualify for a refund of up to $4,000 on the provincial land transfer tax. Eligibility requirements include:
- Being a first-time homebuyer.
- Not having owned any home prior to this purchase.
If you are buying in Toronto, you may also be eligible for a municipal land transfer tax refund of up to $4,475. To qualify:
- You must be a Canadian citizen or a permanent resident.
- You must be a first-time homebuyer who has never owned property anywhere globally.
- You need to be at least 18 years old.
- The home must be occupied as your primary residence within nine months of the title transfer.
First-Time Home Buyer Tax Credit (HBTC)
The First-Time Home Buyer Tax Credit (HBTC) offers a one-time tax credit that reduces the amount of income tax owed by first-time buyers. A tax credit of $5,000 is available if:
- The home will be your principal residence, and you haven’t owned a home in the four years preceding the purchase.
- You or your spouse/common-law partner have purchased a qualifying home.
Summary of Key Points:
1. Home Buyers’ Plan (HBP):
- Withdraw up to $35,000 from RRSP for home buying or building.
- Repay the withdrawn amount over 15 years.
- Must be a first-time buyer and Canadian resident.
2. Ontario Land Transfer Tax Refund:
- Up to $4,000 refund for first-time buyers in Ontario.
- Additional $4,475 refund for purchases in Toronto.
3. First-Time Home Buyer Tax Credit (HBTC):
- Claim $5,000 tax credit for your first home purchase.
- Home must be a principal residence with no prior ownership in the last four years.
These programs are designed to reduce the financial burden on first-time homebuyers, making it easier for Canadians to achieve homeownership.
Last modified: March 1, 2025
