There are three main incentive programs for first-time home buyers:
There are many programs available for first-time home buyers in Canada. They help make housing more affordable and accessible to many Canadians looking to buy their first home. While many regions may offer their own incentives, there are three programs that are accessible to most Canadians:
Programs like the Canada First-Time Home Buyer Incentive and the Home Buyers' Plan are available to Canadians nationwide. Others like land transfer tax rebates can vary by province and municipality.
Ontario offers a land transfer tax refund of up to $4,000 for first-time home buyers.
BC requires its home buyers to pay a Property Transfer Tax (PTT) when purchasing a new home. The tax is valued at:
There are several conditions that would allow you to be exempt from this tax. Foregin buyers have to pay an additional 15% of the tax.
If you are a first-time home buyer, British Columbia offers a land transfer tax refund for properties worth below $500,000. The refund covers the full tax amount if your asking price is $475,000 or below. Otherwise, the refund is partial.
For more information, see the official regulations.
Quebec charges a Land Transfer Tax called the Welcome Tax that is different for Montreal but the same for the rest of Quebec. It increases to up to 1.5% for property valued over $258,600 and for Montreal increases up to 3.0% for property valued over $2,000,000.
The rates above are accurate for fiscal year 2020. You are exempt from the land transfer tax if your property is worth under $5,000, or if you are transferring the property to an immediate family member.
The Montreal Home Ownership Program provides financial assistance to first-time home buyers amongst other tax-exemption possibilities. You may qualify for both a land transfer tax rebate as well as a lump-sum subsidy when purchasing your first home in Montreal. For your convenience, we have provided the table below.
|Home-Buyer Requirements||Eligible Property Values||Lump-Sum Payment||Welcome Tax Refund|
|Single Buyer without Children||Under $200,000||$2250|
|Household without Children (More than one buyer)||Under $250,000||$2250|
|Households with minimum one child under 18||Under $280,000 (Increases up to $360,000 if property has more than 3 bedrooms)||$5,000 (Increases up to $6,250 if property has living spaces of more than 1033 square feet)||100%|
|Households who already bought property prior to 2018 and has at least one child under 18||Under $360,000 (Must have more than three bedrooms)||100%|
Prince Edward Island charges a land transfer tax equal to 1% of your purchase price. You are exempt from the tax if:
In most provinces, when you buy a home or property, you may have to pay a land transfer tax to the provincial government at the time of closing. The amount of tax is usually based on the property's value. Some cities including Toronto also charge a separate land transfer tax.
For a $500,000 home in Toronto, Ontario, your land transfer tax would be:
Each province has their own definitions of a First-Time Home Buyer. Generally:
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 Government of Canada offers a First-Time Home Buyer Shared Equity Incentive Program that shares part of the ownership and costs of buying your home with the government. Under the program, the government will contribute 5% or 10% of the home's price towards your downpayment in exchange for the same amount of equity in your home. This can significantly reduce your interest payments and CMHC mortgage insurance premiums due to the larger downpayment.
The government's share in your home will have to be repaid within 25 years or when you sell your home, whichever comes first. Any gains or losses in the market value of your home will be shared with the government. This is not a typical loan, and no interest will be charged.
Based on a home value of $500,000 and an income of $120,000, you could be eligible to apply for 5% of your purchase price in shared equity. This works out to a maximum of $25,00025k in government incentives.
The program is only available for CMHC-insured mortgages. Therefore, you are automatically ineligible if
To qualify for a government shared-equity incentive,
Even if you satisfy these criteria, there are limits on how much you can borrow depending on your annual household income. Other criteria may apply in special situations.
You qualify as a first-time home-buyer if you satisfy at least one of the following conditions:
Only one spouse/common-law partner needs to meet the above requirements to qualify.
The program launched September 2, 2019, and will end either:
whichever occurs sooner. Many experts expect the funding to go quickly, so it may be prudent to act as soon as possible.
Borrowing limits may apply in both of these cases.
Your borrowing limit is four times your annual household income. Your total borrowing amount (mortgage principal + shared-equity incentive) cannot exceed this limit. The CMHC mortgage insurance premium does not count towards the limit.
No partial incentives are given. The only options are 5% and 10% shared-equity.
The amount you owe depends on the future fair-market value of your property at the time of repayment. You will need pay 5% or 10% of your property's value, depending on which incentive program you applied for. No interest is charged in either case and both gains and losses are shared proportionally with the government.
You must pay back the incentive within 25 years or if the property is sold, whichever occurs first. You must pay the amount in one full lump-sum payment.
There are no prepayment fees or penalties for an early payment. If you believe your property's value will rise in the future, paying early may allow you to benefit from owning a greater share of the home's price appreciation.
Yes. However, you can only apply for the 5% shared-equity incentive option, even if the home is new.
As of March 19, 2019 (as part of Budget 2019), the Home Buyers’ Plan will allow first-time home buyers to withdraw up to $35,000 tax-free from their registered retirement savings plan (RRSP) to buy or build a home. The amount must be repaid over a period of 15 years.
This is a recent increase over the previous limit of $25,000.
You must meet the following criteria to qualify for the Home Buyers’ Plan:
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 downpayment. This can allow you to save significantly more for your downpayment 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 downpayment 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 downpayment, 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.
If you have purchased a newly constructed or substantially renovated home, you may be eligible to reclaim the GST or federal part of the HST charged on the purchase of said property.
This incentive applies to:
More terms and conditions apply. See the Government of Canada's website for additional eligibility criteria and information.