Summary of Key First-Time Homebuyer Programs

Here is a summary of the primary programs and credits available to assist first-time homebuyers with their purchase.

•First Home Savings Account (FHSA): A tax-free account for saving up to $40,000 towards a home purchase. Contributions are tax-deductible, and withdrawals are tax-free. This program is currently Active.

•RRSP Home Buyers’ Plan (HBP): Allows a tax-free withdrawal of up to $60,000 per person from an RRSP for a down payment. This program is currently Active.

•Home Buyers’ Amount: A non-refundable federal tax credit of up to $1,500 to help offset closing costs. This program is currently Active.

•Land Transfer Tax Rebates: Rebates on provincial or municipal land transfer taxes are available in select provinces, such as British Columbia (up to $8,000) and Ontario (up to $4,000). This program is currently Active in those select provinces.

•GST/HST New Housing Rebate: This is an existing program that provides a rebate on the GST or the federal part of the HST for new homes valued under $450,000. This program is currently Active.

•First-Time Home Buyers’ GST/HST Rebate: This is a Proposed (not yet available) top-up to the existing rebate, which would offer up to $50,000 on new homes valued up to $1 million.

Detailed Program Information

First Home Savings Account (FHSA)

Introduced in April 2023, the First Home Savings Account (FHSA) is a powerful tool that combines the benefits of an RRSP and a TFSA. Contributions are tax-deductible, and qualifying withdrawals to purchase a first home are non-taxable. You can contribute up to $8,000 per year, with a lifetime maximum of $40,000. Unlike the HBP, funds withdrawn from an FHSA do not need to be repaid.

RRSP Home Buyers’ Plan (HBP)

The Home Buyers’ Plan allows you to withdraw funds from your Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home. The withdrawal limit has been increased to $60,000 per person. These funds are not taxed upon withdrawal but must be repaid to your RRSP over a 15-year period.

Home Buyers’ Amount (Tax Credit)

Formerly known as the First-Time Home Buyers’ Tax Credit, this non-refundable federal tax credit helps with closing costs such as legal fees and inspections. Eligible individuals can claim $10,000 on their tax return (line 31270), which provides a tax credit of up to $1,500.

Land Transfer Tax Rebates

Several provinces offer rebates on land transfer tax to reduce closing costs for first-time buyers.

In British Columbia, as of April 1, 2024, the First Time Home Buyers’ Program eliminates the property transfer tax on the first $500,000 of a home’s value for properties with a fair market value of $835,000 or less, providing a maximum rebate of $8,000. A partial exemption is available for homes valued between $835,000 and $860,000. This is a significant increase from the previous $500,000 threshold.

In Ontario, first-time homebuyers are eligible for a maximum land transfer tax refund of $4,000. This completely offsets the tax payable on homes valued up to $368,000.

GST/HST New Housing Rebates

There are two key components to the GST/HST rebate for new homes:

•Existing GST/HST New Housing Rebate: This program allows individuals to recover a portion of the GST or the federal part of the HST paid on a new or substantially renovated house. It is available for homes with a fair market value of less than $450,000.

•Proposed First-Time Home Buyers’ GST/HST Rebate: The government has proposed new legislation to enhance this rebate specifically for first-time buyers. This would eliminate the GST on new homes valued up to $1 million (a rebate of up to $50,000) and provide a partial rebate for homes between $1 million and $1.5 million. This program is not yet in effect, and applications are not yet available.

Discontinued and Clarified Programs

It is crucial to note which programs from the past are no longer available or are commonly misunderstood.

•First-Time Home Buyer Incentive (CLOSED): The First-Time Home Buyer Incentive, a shared-equity mortgage program administered by the CMHC, was discontinued in March 2024 and is no longer accepting applications.

•BC Home Owner Grant (Not a FTHB Program): The BC Home Owner Grant is a property tax reduction for all eligible homeowners on their principal residence. It is not exclusive to first-time buyers and should not be confused with purchase-related incentives.

•Newly Built Home Exemption: This term is often used interchangeably with the property transfer tax exemptions or GST/HST rebates. In B.C., the primary program for new builds is the updated First Time Home Buyers’ Program for property transfer tax. There is no separate, standalone program with this name.