Lesson 5: First Time Home Buyer
Congratulations on taking the exciting step towards buying your first home! Becoming a homeowner is a significant milestone and a major financial decision. Here are some essential points to consider as you embark on this journey! The dream of owning a home is an integral part of the Canadian identity, and for many first-time home buyers, it can seem like an unattainable goal. However, the Canadian government recognizes the importance of homeownership and has introduced a number of programs and incentives.
1.Home Buyers Amount
You may be eligible to receive a non-refundable tax credit of up to $1,500.
- You (or your spouse or common-law partner) acquired a qualifying home
- You did not live in another home that you (or your spouse or common-law partner) owned in the year of acquisition or in any of the four preceding years (first-time home buyer)
You can claim up to $10,000 for the purchase of a qualifying home in 2022 if both of the following apply:
- You (or your spouse or common-law partner) acquired a qualifying home
- You did not live in another home that you (or your spouse or common-law partner) owned in the year of acquisition or in any of the four preceding years (first-time home buyer)
2.GST/HST New Housing Rebates
You may be eligible for a rebate for some of the tax you pay when buying your home. The GST/HST new housing rebate allows an individual to recover some of the GST or the federal part of the HST paid for a new or substantially renovated house that is for use as the individual’s, or their relation’s, primary place of residence, when all of the other conditions are met. In addition, other provincial new housing rebates may be available for the provincial part of the HST whether or not the GST/HST new housing rebate for the federal part of the HST is available. The new housing rebate is not available to a corporation or a partnership.
3.HBP
The Home Buyers’ Plan (HBP) is a program that allows you to withdraw from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. You may withdraw up to $35,000 from your registered retirement savings plan (RRSP) tax-free to buy your first home. The Home Buyers’ Plan (HBP) is a program that allows you to withdraw funds from your Registered Retirement Savings Plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. The HBP allows you to pay back the withdrawn funds within a 15-year period.

4.FHSA
The FHSA is a specialized savings account designed exclusively for first-time home buyers in Canada. It offers a range of benefits and incentives that make it a compelling option for those looking to save for their dream home. Here’s what you need to know about this exciting savings tool. To open a FHSA you must be a resident of Canada and at least 18 years old. You (or your spouse/common law partner) also must not have owned a home that was considered your principal residence in the previous calendar year or at any time in the preceding four calendar years. If that all checks out, you are in the clear.
What is a first home savings account?
The FHSA is an investment account meant to be used to purchase your first home. A FHSA is its own unique account that combines the tax-free growth aspect of a Tax-Free Savings Account (TFSA), and the tax-deductible contributions of a Registered Retirement Savings Account (RRSP). You can set aside up to $40,000 over a 15-year period. You can contribute up to a maximum of $40,000 over the lifetime of the account, this is achieved by annual contribution limits of $8,000. You can also carry forward a maximum of $8,000 of your unused annual limit. Meaning if you contribute $4,000 in 2025, in 2026 you can contribute a maximum of $12,000, the annual limit resets at the beginning of each calendar year. Tax deductions can be carried forward indefinitely. You can contribute from your employment income, other existing non-registered accounts or TFSA, or transfer from your existing RRSP on a tax-free basis. Please note that with contributions from RRSP transfers, you cannot claim the tax deduction and the RRSP contribution room will not be reinstated. The account can remain open for a maximum of 15 years or until you turn 71 and contributions follow the same qualified investment criteria as a RRSP or TFSA.
5.Land Transfer Tax Rebate
Ontario First Time Home Buyers Land Transfer Tax Credit. As a first-time home buyer in Ontario, you are eligible to receive the Ontario First Time Home Buyers Land Transfer Tax Credit. in order to qualify: the land must be owner occupied; and the purchaser(s) cannot have owned a house, or interest in a house, regardless of location. To instantly receive this rebate, upon purchasing your first home, advise your lawyer ahead of time that you qualify to receive the rebate. Land transfer tax (LTT) is a marginal tax, and each portion of your home’s value is taxed at a unique rate.
Limitation:
The refund will be reduced if one (or more) of the purchasers is not a first-time homebuyer. The refund will be proportionate to the interest acquired by the individuals who qualify for the refund.
Examples:
Where a parent who is not a first‑time homebuyer, and a child who is a first‑time homebuyer, purchase a home with equal 50/50 interests, the child may claim a refund of 50% of the land transfer tax refund. The child’s claim cannot exceed 50% of the maximum allowable refund (i.e., 50% of $2,000 for conveyances or dispositions prior to January 1, 2017 or 50% of $4,000 for conveyances or dispositions on or after January 1, 2017).
In a situation where a parent is also on title to a child’s property, such as at the insistence of a bank, it will be necessary to pay land transfer tax at the time of registration and apply for a refund from the Ministry of Finance.