First-Time Home Buyers Incentives

If you're a first-time homebuyer, you're in for some good news! Ontario offers several fantastic incentive programs tailored specifically for you! Here are the details below:

1. The Home Buyer’s Plan (HBP)

The Home Buyer’s Plan (HBP) lets first-time homebuyers take money out of their registered retirement savings plan (RRSP) to buy or build a qualifying home. This money isn't taxed as income, unlike usual RRSP withdrawals, but you need to pay it back. You have 15 years to pay off the money into your RRSP, starting two years after you first withdrew it. The most you can take out from your RRSP for your home purchase is $35,000. (For more information on HBP, visit the CRA Website)

First-Time Buyer RRSP Plan

  • Your home must be a Principle Residence

  • RRSP withdraws up to 30 days after buying the home

  • If withdrawals from RRSP are taken out before closing on your new home, you must own or build by October 1st of the following year

Do You Qualify?

  • A first-time home buyer as someone who has not owned a home that they occupied as their principal place of residence during the period.

  • If you owned and sold a home five years ago, or had a property that wasn’t your principal residence, you are still considered a first-time homebuyer.

2. Land Transfer Tax Refunds

When you purchase a home in Ontario, you are required to pay a land transfer tax upon assuming ownership of the property. If the home you purchased is located in the City of Toronto, a secondary land transfer tax comes into play. The good news is that both the provincial and Toronto governments offer incentive programs specifically designed for first-time home buyers, aimed at easing the burden of land transfer taxes. Click Here to use our Mortgage Calculator!

Ontario Land Transfer Tax Refund

The Ontario government incentivizes first-time home buyers by offering a refund on the land transfer tax in Ontario, up to a maximum of $4000.

To qualify for the land transfer tax refund:

  • Never owned a home ever, anywhere

  • The amount of the refund will be reduced If the person you are buying a home with has owned a home before

City of Toronto Land Transfer Tax Refund

Toronto has an additional Municipal Land Transfer Tax: an additional rebate for first-time home buyers that reaches a maximun of $4,475.

3. First-Time Home Buyer Tax Credit (HBTC)

There are so many closing costs associated with buying a first home, which can make it difficult to pay expenses while also saving up for a down payment. 

  • one-time expenses like lawyer fees, HST (for new homes)

  • adjustments (like prepaid taxes or utilities by the seller) needed to finalize the purchase.

The First-Time Home Buyers Tax Credit was created in order to assist with expenses for the first-time home buyer. It's a $5,000 non-refundable income tax credit that can give you up to $750 in federal tax relief.

Who Qualifies as a First Time Home Buyer for Ontario’s Tax Credit?

  • The home must serve as your main residence.

  • You or your spouse can't have owned a home in the past four years.

  • If purchasing with a spouse, friend, or family member, they must also be a first-time home buyer.

  • Either you or your co-buyer can claim the credit, or you can split it; the maximum credit for any combination of owners is $750.

4. Canada Mortgage and Housing Corporation Insurance (CMHC)

The Canada Mortgage and Housing Corporation (CMHC) assists prospective homebuyers by offering mortgage loan insurance, enabling them to purchase a home with a down payment as low as 5%. This valuable service facilitates earlier homeownership by reducing the upfront financial burden for buyers, making the dream of owning a home more accessible and achievable.

5. First Home Savings Account (FHSA)

Starting April 1, 2023, the First Home Savings Account aims to offer first-time buyers an extra tax-free method to save for their down payment!

Here are the details:

  • You can deposit up to $8,000 annually without paying taxes.

  • There's a lifetime limit of $40,000.

  • Any unused portion of the $8,000 yearly limit can be carried over to the next year.

  • The account has a 15-year limit; after that, you must transfer the funds and close it to avoid taxation.

  • The purchased home must be your primary residence; it can't be an investment property.

  • You must move into the home within a year of buying it.

  • Withdrawing funds for non-home-related purposes will incur taxes.

Get in touch with us to buy your first home! We will answer any other questions you may have.