Buying your first home is one of life’s most significant milestones and one of life’s most significant challenges for many living in Canada. Purchasing a home is an important financial decision as it’s likely one of the most expensive things you will ever contemplate buying. 

Fortunately, several government first-time home buyers grants available in Canada to help offset some of the costs associated with purchasing a home – helping you realize your dreams of home ownership faster while saving some coin. 

Key Takeaways 

• There are four key programs available to first-time buyers. The First-Time Home Buyer Tax Credit (HBTC), Land Transfer Tax Rebates (LTTR), RRSP Home Buyer’s Plan (HBP), and the GST/HST New Housing Rebate (NHR).
• The HBTC and HBP are federal government tax benefits for first-time home buyers.
•  The LTTR and NHR are available rebates to help offset some of the expenses you pay when purchasing or building a home. 

What Are First Time Home Buyer Grants in Canada?

Four key first time homebuyer grants and incentive amounts are available to first-time home buyers designed to help offset some of the initial costs of owning a home. These programs will help first-time buyers fund and offset some of the upfront costs necessary when purchasing a home. 

The First-Time Home Buyer Tax Credit (HBTC) is a federal government program designed to help offset closing costs associated with buying your first home. You can claim up to $10,000 on your tax return – for a maximum $1500 tax credit. 

The Land Transfer Tax Rebate (LTTR) is a rebate on all or a part of the land transfer taxes you must pay when you purchase a home. First-time buyers may be eligible for rebates on all or a portion of those taxes, depending on the province or municipality they reside. 

The RRSP Home Buyer’s Plan (HBP) is a federal government program that allows first-time buyers to withdraw up to $60,000 ($120,000 for couples) from RRSP accounts on a tax-free basis to buy or build a qualifying first home for you or a related person with a disability. 

The GST/HST New Housing Rebate (NHR) is a rebate on the GST, or federal portion of the HST paid on new or significantly renovated homes – as long as they are used as the primary residence. This rebate is available to anyone (not just first-time buyers) purchasing a newly built home from a builder, or if you’re custom building or renovating a home you already own.

Tell More More About the First-Time Home Buyer’s Tax Credit

In 2022 and subsequent tax years, the government increased the amount you use to calculate the First-Time Home Buyer’s Tax Credit to $10,000 – meaning the maximum tax credit is now $1500, up from the previous $750 for eligible homebuyers. 

To be eligible, you must be a first-time homebuyer – meaning that you have not resided in a property that you (or your spouse or common-law partner) have owned in the previous four years. You may also qualify if you are not a first-time homebuyer if you are eligible for the disability tax credit or acquired the home for a related person eligible for the disability tax credit. 

The qualifying home must be registered in your or your spouse’s or common-law partner’s name with the applicable land registration system and located in Canada. This includes existing homes and homes under construction. You must also intend to occupy the home or have a related person with a disability occupy the home as a principal place of residence no later than one year after it is acquired.

A qualifying home can be a:

• Single-family home,
• Semi-detached home,
• Townhome,
• Mobile home,
• Condo unit,
• Owned apartment unit in a duplex, triplex, fourplex, or apartment building,
• Share in a cooperative housing corporation (as long as you are entitled to own and have an equity interest in the unit – shares that only give you the right to tenancy are not eligible)

You must apply for this tax credit on your income tax return for the year you purchased the home. To do this, enter $10,000 on line 31270 of your return if you are not splitting the amount with a spouse or common-law partner (you can each claim a portion as long as the combined total does not exceed $10,000). Remember to keep all supporting documents if the CRA wants to review them. 

About the Land Transfer Tax Rebate

Land transfer tax or the Property Transfer Tax, Real Property Transfer tax or Welcome tax, depending on the province in Canada you reside – is a tax introduced to most provinces during the 70s and 80s. 

Land Transfer Tax is a tax you must pay when you purchase a home. First-time buyers may be eligible for rebates on all or a portion of those taxes, and this amount is dependent on which province or municipality you reside in. For those living in Ontario, British Columbia, and PEI, there are rebates available, and you may receive a refund for all or part of the Land Transfer Tax you pay in these provinces. 

There are two provinces – Quebec and Nova Scotia that are the only provinces where the land transfer tax rate is based on the municipality – with Montreal’s land transfer tax rate being the highest in Quebec. 

To be eligible to claim the Land Transfer Tax Rebate in Ontario, you:

• Must be at least 18 years old.
• Must be a Canadian citizen or permanent resident (or become one within 18 months of purchase).
• Have not previously owned or had an interest in a home anywhere in the world.
• Must apply for the refund within 18 months after the date of registration or the date the unregistered disposition occurs.
• Must occupy the home as your principal residence within 9 months after the conveyance date or disposition. 

The above eligibility criteria must apply to claim the Municipal Land Transfer Tax (MLTT) Rebate in Toronto.

In British Columbia, to be eligible to claim the Property Transfer Tax Refund, you:

• Must be a Canadian citizen or permanent resident (or become one within 18 months of purchase).
• Have not previously owned or had an interest in a home anywhere in the world.
• Must have lived in BC for at least 12 consecutive months immediately before the date you registered the property or filed at least 2 income tax returns as a BC resident in the past 6 years.
• Have never received the first-time home buyers exemption or refund.

In Prince Edward Island, to be eligible to claim the Real Property Transfer Tax Exemption, you:

• Must be at least 18 years old
• Must be a Canadian citizen or permanent resident of Canada (or become one within 18 months of purchase).
• Have not previously owned or had an interest in a home anywhere in the world.
• Must have lived in PEI for 6 consecutive months immediately before the date you registered the property or filed at least 2 income tax returns as a PEI resident in the past 6 years.
• Have never received the first-time home buyers exemption or refund.

What is a RRSP Home Buyer’s Plan?

The RRSP Home Buyers Plan (HBP) is a federal government first-time home buyer grant that enables buyers to use the savings in their Registered Retirement Savings Plan (RRSP) toward their down payment. 

This Government of Canada plan allows a tax-free withdrawal of up to $60,000 to buy or build a qualifying home. If you purchase with a spouse, you can withdraw up to $35,000 each (for a combined total of $120,000). The funds can be used toward paying for anything related to the purchase of your home, such as a down payment, closing costs, or home furnishings. 

Money withdrawn under this plan must be re-paid back into your RRSP accounts at tax time – either through a lump sum payment or yearly minimum payment installments (equal to 1/15th of the total owing at any given time until fully repaid). However, there is a 2-year grace period immediately after funds are withdrawn. If you don’t make your annual HBP minimum payment, the amount will be added to your taxable income for the year and become fully taxable.

To be eligible to use the HBP, you:

• Must be a Canadian resident when you withdraw the funds from your RRSP up to the time a qualifying home is purchased or built. 
• Must be considered a first-time home buyer. 
• Must have held the funds in your RRSP for at least 90 days before withdrawal.
• Must have a written agreement to buy or build a qualifying home for yourself or a related person with a disability. 
• Must intend to occupy the home as your principal residence within 1 year after purchasing or building. If purchasing for a qualifying person with a disability, they must occupy the home as their principal residence.

GST/HST New Housing Rebate

If you plan to purchase a new home from a builder, build a custom home, or significantly renovate a home you already own – you may qualify for this rebate. The GST/HST New Housing Rebate is a rebate on the GST or federal portion of the HST you pay on this type of home. 

This rebate is available to individuals (not just first-time buyers) to recover some of the tax paid on a home purchased for use as your or a relation’s primary place of residence. You are not eligible for this rebate if you plan to co-own the home with someone considered a corporation or partnership. 

For homes purchased directly from a builder, you may qualify if one of the following applies:

• The purchase is of a new or substantially renovated home from a builder (building and land).
• The purchase is of a new or substantially renovated home from a builder where the land is leased from the builder. The lease must be for at least 20 years or more and give you the option to buy the land. It must also be under the same agreement to purchase the home.
• The purchase is of a new or substantially renovated mobile home or floating home from a builder (manufacturers and vendors are included).
• The purchase entitles you to a share of capital stock in a cooperative housing corporation (co-op).

For owner-built homes, you may qualify if one of the following applies: 

• You have built or are engaging someone else to build a home on land you own or lease.
• You have substantially renovated or engaged someone else to renovate your home. Substantially meaning at least 90% of the home’s interior has been removed or replaced. 
• You have renovated or are engaging someone else to renovate your existing home and have built or are engaging someone to build a major addition to your home. Major addition means at least double the size of the existing living area of the home. 
• You have converted a non-residential property into a home.
• You have substantially renovated or engaged someone to renovate a mobile or floating home.

For renovated homes, you may qualify if one of the following applies:

• You have substantially renovated your existing home.
• You have converted a non-residential property into a home. 
• You have built a major addition to your existing home and renovated the home. 

Frequently Asked Questions

Final Thoughts

Various grants and programs are available to help financially assist first-time home buyers when purchasing a home. Leveraging the Home Buyer’s Tax Credit (HBTC), Land Transfer Tax Rebates (LTTR), Home Buyers Plan (HBP), and the GST/HST New Housing Rebate (NHR) are just a few ways to offset some initial costs when purchasing a home. Researching and understanding the eligibility criteria and how to apply for first-home grants and programs will help you maximize your savings best and make the most of the options available.