First Time Home Buyer Incentives in Canada 2022

Each province has their own definition of a First-Time Home Buyer. Generally:

• You must be at least 18 years of age.
• You must be a Canadian citizen or permanent resident.
• You must occupy the property as your principal residence.
• You cannot have owned a home, or a stake in a home, anywhere in the world, at any time.
• Your spouse/common-law partner cannot have owned a home while they were your partner.

You may claim an immediate refund (or exemption from the tax) at the time of registration.

Yes. You may have up to an 18 month period after the registration of your new home to apply for a refund.

Yes, in certain cases. After the purchase of a property, you have an 18-month window following registration to obtain a rebate. If you gain citizenship or permanent residency during this period, you can claim the full rebate amount.

The Non-Resident Speculation Tax (NRST), also known as land speculation tax, is a 20% tax on residential property in Ontario. The tax only applies to individuals who are not citizens or permanent residents of Canada. However, the Canadian Federal 2022 budget announced a home buying ban for those who aren’t citizens or residents of Canada.

The federal announcement supersedes provincial programs meaning the NRST will be irrelevant while the ban is effective. However, NRST will continue to operate until the federal bill is passed and when foreign investors are welcomed again. For more information, visit our Land Transfer Tax Calculator.

You must meet the following criteria to qualify for the Home Buyers’ Plan:

• You must be a resident of Canada at the time of withdrawal.
• You must be the owner of the RRSP(s) from which the withdrawals are made.
• Your RRSP contributions must have stayed in the RRSP for at least 90 days before withdrawal.
• Neither you nor your spouse/common-law partner can have owned the relevant home for more than 30 days.
• Neither you nor your spouse/common-law partner can have owned another home in the last four years.

If you have a disability, the last requirement is waived. Additional requirements may apply in special cases.

The Home Buyer's Plan allows you to withdraw before-tax contributions to your RRSP for your down payment. This can allow you to save significantly more for your down payment than you would be able to with after-tax income.

For example, if you are in a 40% tax bracket and plan to save $10,000 towards your future down payment every year, that $10,000 is equivalent to approximately $16,667 of before-tax income. With an RRSP, you would be able to contribute the full before-tax income amount to your future down payment, allowing you to save 66% more from each paycheck compared to saving in a typical after-tax account.

You can find out more on RRSPs and the March 2nd contribution deadline with our Guide to RRSPs.

The withdrawal limit is per person. Each spouse/common-law partner has their own, separate withdrawal limit. If you are married or in a common-law relationship, you can withdraw a total of $70,000.

Note that only the person registered as the owner of an RRSP can withdraw from it under the program. Each spouse will need to have their own RRSP account to take advantage of the increased limit. There are also additional limitations regarding contributions to both individual and spousal RRSPs where contributions have to be made at least 90 days before the first withdrawal.

You must submit a Form T1036 to your financial institution for each withdrawal you wish to make.

You can make an unlimited number of withdrawals within one calendar year up to a total of $35,000. Withdrawals made during January of the following year are also tax-exempt. Because of this, we recommend either a single withdrawal or to start withdrawing early within the year.

You have up to 15 years to repay the amount withdrawn to your RRSP. Repayments start the calendar year after the withdrawal is made. Each year, the Canada Revenue Agency (CRA) will send you a Home Buyers’ Plan statement of account listing your remaining balance and minimum payment.

If you make more than your minimum payment, your later minimum payments will be reduced. You may repay the full loan amount at any time without penalty.

To make a repayment under the Home Buyers’ Plan (HBP), you need to make a contribution to your RRSP and designate a portion of the contribution as an HBP repayment. You may make this designation on line 246 of Schedule 7 when filing your next tax return.

Jessica and her husband want to buy a home in Toronto for $900,000, but only have $80,000 saved for a down payment. Assuming an interest rate of 3%, their monthly payment would normally be $4,036 per month.*

Jessica and her husband each withdraw $35,000 from their own RRSP account. In total, they make a down payment of $150,000, lowering their monthly mortgage payment to $3,649. That’s a savings of $387 per month, or $116,000 over the lifetime of their mortgage.

To repay the loan, they will need to make an annual payment of $4,667 for 15 years. No interest or tax is charged on the RRSP withdrawal.

*Assuming a 5-year fixed term with 25-year amortization.

Nathan purchased a home five years ago with the help of the RRSP Home Buyers’ Plan. He withdrew the maximum of $35,000, and has made the minimum $2,333 annual payment each year.

This year, however, Nathan can only afford to make a payment of $1,000. The missing $1,333 is filed as taxable income on his next return. Since his remaining balance is now larger than planned, his minimum payment increases to $2,481 starting next year. No other fees or penalties are charged.