First Time
home buyer
credits

First time home buyer credits are many ways that the government helps you save money on your purchase. As you embark on this new life journey, this guide will help you to discover what you may qualify for, and help you apply for them! 

CMHC Insurance 

Mortgage default insurance, otherwise known as CMHC insurance, is a type of insurance you pay on a mortgage if your down payment is less than 20% of the purchasing price of a home. It protects the lender in case you cannot make your mortgage payments. 

Mortgage insurance is calculated as a percentage of the value of your mortgage, check the chart below to know how much your mortgage insurance could be based on your down payment.

CMHC insurance is not available on homes valued over one million dollars, so if the home you are purchasing is over one million dollars, you must have a down payment of 20% or more ($200,000). 

In Canada, you have to have to have a minimum down payment of 5% when purchasing a home. However, this only applies to homes with a value of $500,000 or less. For homes valued over $500,000, you can pay 5% down on the value up to $500,000, and then 10% on the value between $500,000 and one million. 

RRSP Home Buyer’s Plan 

If you haven’t purchased a home in the previous four years, or lived in a spouses purchased home in the same time frame, you may qualify for the Government Home Buyer’s Plan. This allows you to borrow up to $25,000 tax free from your RRSP to help fund the down payment on a new home. If you are purchasing with a partner or spouse who is also a first time home buyer, you can both access up to $25,000, for a total down payment advance of $50,000. The money must have been in your RRSP for at least 90 days before withdrawing, and you have to start repaying the amount borrowed after two years, and over the next 15 years. 

In order to qualify as a first time home buyer, you must meet the following criteria: 

  • The RRSP funds you borrow must be in your account for 90 days prior to withdrawal
  • You cannot have owned a home in the previous four years
  • If you are buying a house with a spouse or partner, you cannot have lived in a house they owned in the previous four years
  • You have entered into a written contract to buy or build a qualifying home
  • You must intend on living in the home within one year of purchasing as your primary residence
  • If you have used the Home Buyer’s Plan before you must not have an outstanding balance
  • You must make the withdrawal from you RRSP within 30 days of taking title of the home
  • You must be a resident of Canada

If you make a withdrawal from your RRSP and do not qualify for the first time home buyer requirements, it will be taxable income and must be claimed on your personal income taxes. 

How to Participate

In order to participate in the Home Buyer’s Plan, you must print off a copy of the T1036 form from the CRA website. You must fill out section one of the form, and then take the form to the financial institution that holds your RRSP to fill out section two. Also, you will be issued a T4RSP which will confirm how much you withdrew under the HBP. You must include this with your personal income tax for the year in which you make the withdrawal. You must make the withdrawal within 30 days of taking the title of the home, and start paying back the loan after 2 years, with annual payments for up to 15 years. 

Canada Revenue Agency will send you a notice of assessment in which you can report the amounts paid back, and the amount left owing. Loan repayments are contributions back into your RRSP at a minimum amount over the 15 years. For example, if you borrow the entire $25,000 allotted, you must contribute at least $1,700 every year back into your RRSP. 

Land Transfer Tax Rebate 

Buying a home in Ontario qualifies you for a rebate on some of the land transfer tax you pay when you purchase a home. 

If you are purchasing a condo, townhouse, or house in Toronto, and you’re a first time buyer, you’re eligible for a rebate on the city’s land transfer tax, in addition to the provincial rebate. 

First time home buyers in Ontario can qualify for a rebate equal to the full amount of their land transfer tax, up to a maximum of $4,000. 

To qualify for the land transfer tax rebate, you must meet the following qualifications: 

  • Be a Canadian citizen or permanent resident of Canada
  • Be 18 years or older
  • Make the home your primary residence within nine months of purchase
  • Cannot have owned a home prior to this one
  • If you have a spouse, they cannot have owned a home in the time since you partnered with them.

Based on the Ontario land transfer rates, this rebate will reimburse you for the amount of land transfer tax of a maximum purchase of $368,333. For purchases over that amount, you will qualify for the maximum rebate, but must pay the remaining land transfer tax. If you are buying a home with your partner or spouse, but only one of you qualifies for the rebate, you can still receive 50% of the rebate. You must also apply for this rebate within 18 months of signing the land transfer. 

Your real estate lawyer will help you file the paperwork for this credit if you qualify. You can file online on the Land Transfer Tax Rebate Website. 

In Toronto

Toronto based home buyers can also qualify for an additional land transfer tax rebate of up to $4,475. 

This is in addition to the provincial rebate, and applies to Toronto townhouses, houses, and condominiums. 

To qualify for the Toronto Municipal Land Transfer Tax Rebate for First Time Purchasers, you must fit the following criteria: 

  • Be a citizen or permanent resident of Canada
  • Be 18 years of age or older
  • Make the home your primary residence within 9 months of purchasing
  • Cannot have owned a home before
  • If you have a spouse, they cannot have owned a home since becoming your spouse.

Based on the rebate rate, this rebate will cover the land transfer tax for the purchase of a home up to $400,000. For homes over that purchase price, you must pay the remainder of the land transfer tax. If you are buying your home with a spouse but only one of you qualifies for the rebate, you can still receive 50% of this rebate. 

Your real estate lawyer will help you fill out the forms, and you can apply online on the Municipal Tax Credit Website

First Time Home Buyer’s Tax Credit 

The First Time Home Buyer’s Tax Credit was introduced in 2009 as part of Canada’s Economic Action Plan to help Canadians purchase their first home. It’s designed to help recover things like lawyer fees, inspections, and land transfer taxes. 

Currently, the non-refundable credit is $750 that must be applied for within a year of purchasing a qualifying home (see below). If you are purchasing a home with a friend, partner, or spouse, the credit claimed cannot exceed $750 no matter who is claiming it, and must be included on your personal tax return on line 369. 

How do you qualify for the First Time Home Buyer’s Tax Credit? 

To qualify for the credit, your home must meet the following requirements: 

  • Located within Canada
  • Be an existing or newly built home
  • Be a single, semi-detached, townhouse, mobile home, condo or apartment
  • Can include a share of a co-operative housing unit as long you own it
  • You must occupy or intend on occupying the home within one year of purchase
  • You or your spouse must be the purchasers ofthehome 
  • The home must be registered in your name or yourspouse’sname 
  • You cannot have owned a home, or lived in a home owned by your spouse in the previous four

years 

  • You must be able to provide documents supporting the purchase of the qualifying home

Home Buyer’s Tax Credit for People With Disabilities 

If you have an approved Disability Tax Credit with the CRA (you can claim the disability amount on your personal income taxes), you do not have to be a first time purchaser to claim the Home Buyer’s Tax Credit. It can be claimed as long as the home purchased is suitable for the person with disabilities’ needs and they occupy the home within one year of purchase. 

GST/HST New Housing Rebate 

This rebate is offered to homeowners who are purchasing a newly built house, substantially renovating an existing house, or rebuilding a home destroyed by fire. As you will incur GST/HST on these items, the GST/HST portion of a new home purchase can be rebated to all Canadians who qualify. The amount of the GST/HST rebate depends on the purchase price of the home, and can only be claimed if the net purchase price is $450,000 or less. This rebate is open to anyone, whether this is their first home or not, so long as their home purchase qualifies. 

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