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First-Time Homebuyer Benefits in Canada

 

If you or your co-applicant (e.g. spouse) are buying a real estate property for the first time, you are eligible to claim a number of benefits in Canada. The exact numbers may or may not be up to date, so please make sure that you verify those with your accountant, realtor, and/or real estate lawyer.

First-Time Homebuyer Tax Credit

The federal government offers a $5,000.00 non-refundable tax credit for first-time homebuyers, which can translate into a total of $750.00 in tax rebate when you file for your personal income tax. To claim this tax credit, you will need to simply fill in $5,000.00 on the "Home Buyers' Amount" line (Line 31270, or Line 369 before the tax year 2019) of your Schedule 1 in your tax return file.

The provincial government offers a $750 tax credit for first-time homebuyers in Quebec. The property must be in Quebec.

First-Time Homebuyer Incentive

This incentive allows you to borrow up to 10% of the total cost of the property from the CMHC (Canadian Mortgage and Housing Corporation) for 25 years interest-free. However, the amount you need to pay back fluctuates with the value of the property.

For example, if you bought a home worth $600,000 today with a 10% down payment of $60,000, you can borrow the other 10% from CMHC, increasing your down payment to 20%. When you decide to pay back CMHC, if your home is now worth $800,000, you will need to pay back $80,000. Vice versa, if your home is now worth $500,000, then you will only need to pay back $50,000.

Additional qualifications include:

• Household income must be $120,000.00/year to qualify
• 5% down payment required for properties worth $500,000 or less. For properties worth more than $500,000, 5% down payment on the first $500,000 and 10% on the rest. So for a property worth $1.5M, the down payment required would be $25,000 (5% of $500,000) + $100,000 (10% of the rest $1M) = $125,000
• The total mortgage on the property cannot exceed four times your household income. So if your household income is $150,000, your mortgage must be $600,000 or less to qualify.

Land Transfer Tax Rebate

Some provinces in Canada offer Land Transfer Tax Rebate to first-time homebuyers.

• Ontario – Maximum $4,000, up to $368,333 in property value
• Toronto – Maximum $4,475, up to $400,000 in property value
• British Columbia – Maximum $8,000, up to $500,000 in property value
• Prince Edward Island – Maximum $2,000, up to $200,000 in property value

GST/HST New Housing Rebate

The federal government offers rebate programs if you have paid GST or HST when purchasing your home as a first-time homebuyer. You can claim the rebate by filing Form GST191 in your tax return.

Home Buyers' Plan

If you have money in your RRSP, the federal government allows you to borrow up to $35,000 from your RRSP account as a first-time homebuyer. You must repay the total amount into RRSP within 15 years. Repayments do not affect your RRSP deduction limit, and you cannot claim repayments as RRSP contributions for tax deductions.