Education Centre

  • Buying a Property

    • First-Time Homebuyer Rebates

    Being a first-time homebuyer can be overwhelming. On top of saving a down payment for what could be the biggest purchase of your life, the number of closing costs involved can take the grand total to a new level. Fortunately, Canada’s Economic Action Plan includes a few benefits that help first-time buyers cover some of your closing costs.

    First Time Home Buyers’ Plan

    The First Time Home Buyers’ Plan allows qualified first-time buyers to withdraw up to $25,000 tax-free from their RRSPs, to purchase or build a home. If a couple is buying together, and both are qualified first-time buyers, they can withdraw $25,000 each for a total of $50,000.

    What eligibility requirements do I need to meet to quality for the First Time Home Buyers’ Plan?

    To be eligible for the First Time Home Buyers’ Plan (HBP), you must:

    • Be a Canadian resident
    • Be considered a first-time homebuyer
    • Not have owned a home within the past four years
    • Not have lived in a home that your spouse owned within the past four years, if you are now buying together
    • Sign a written agreement to buy or build a home
    • Intend on living in the home within one year of buying or building it
    • Not own the home for more than 30 days, before making the withdrawal
    • Close the sale before October 1st of the year after you made the withdrawal

    Buyers with special needs or who are purchasing homes that are more accessible for an individual with special needs, and/or who are eligible for the Disability Tax Credit, may also be eligible to use the HBP, even if the other eligibility requirements are not met.

    At what point in the home buying process do I make the withdrawal?

    When you find a home you want to buy, you put in a conditional Offer to Purchase (with any condition you want, a home inspection being the most common). Once the seller agrees, you then sign the Offer to Purchase and start your search for a home inspector. At the same time, you can fill out Form T1036, take it to the financial institution that holds your RRSPs, and withdraw the amount you need for your down payment.

    How do I make the withdrawal from my RRSPs?

    To withdraw funds from your RRSPs, using the First Time Home Buyers’ Plan, you must print a copy of Form T1036. Fill out Section 1 yourself then bring the form to the financial institution that holds your RRSPs, so they can fill in Section 2 and make your withdrawal.

    Do I need to do anything else, after I make the withdrawal?

    Once the withdrawal has been made, your financial institution will send you a T4RSP form, which confirms how much you withdrew; you will need to reference this form, in the income tax return for the year you made your withdrawal.

    Do I have to pay back the amount I withdraw from my RRSPs?

    Yes. Because the First Time Home Buyers’ Plan is considered a loan, it must be repaid. You have to repay at least 1/15 of the amount you borrowed each year, and the full amount within 15 years, with the first payment due two years after the funds were withdrawn.

    What happens if I do not meet all of the eligibility requirements for the First Time Home Buyers’ Plan?

    If a condition is not met, after you have made the withdrawal, you will have to claim the amount as income on your personal income taxes and you will pay tax on it. If you have already submitted an assessment for the year you made the withdrawal, you will be required to submit a reassessment.

    First-Time Home Buyers’ Tax Credit

    The First-Time Home Buyers’ Tax Credit is a tax claim made available to first-time buyers purchasing qualified homes. The rebate, at current taxation rates, works out to $750.

    Who is eligible for the First-Time Home Buyers’ Tax Credit?

    To be eligible for the First-Time Home Buyers’ Tax Credit, you must:

    • Be a Canadian resident
    • Be considered a first-time homebuyer
    • Not have owned a home within the past four years
    • Not have lived in a home that your spouse owned within the past four years, if you are now buying together
    • Present documents supporting the purchase of your home
    • Intend on living in the home within one year of buying or building it

    If you have a special need or are buying a home for someone who does, you can claim the Home Buyers’ Tax Credit, so long as you are also eligible to claim the Disability Tax Credit and the person with the special need is living in the home within one year.

    How does a home qualify for the First-Time Home Buyers’ Tax Credit?

    To quality for the First-Time Home Buyers’ Tax Credit, your home must:

    • Be a new or existing home in Canada
    • Be registered in either yours or your spouse’s name
    • Be a single, semi-detached, townhouse, mobile home, condo or apartment
      • Can also include a share in a co-operative housing corporation, so long as you get possession of the home
    How do I claim the First-Time Home Buyers’ Tax Credit?

    To receive your $750 rebate, you must claim it in your personal income tax return under line 369. The claim must be made in the same year you purchased your home and it is non-refundable.

    Land Transfer Tax Rebate

    Land Transfer Tax (LTT) is one of the most overlooked closing costs, which is unfortunate because it can also be one of the most expensive. To help offset this closing cost, first-time homebuyers in some provinces and cities are eligible to receive a land transfer tax rebate.

    Who is eligible for the Land Transfer Tax Rebate?

    If you’re a first-time homebuyer in British Columbia, Prince Edward Island, Ontario or Toronto, you may be eligible to receive a land transfer tax rebate.

    The eligibility requirements in each province are a bit different, as are the rebate amounts.

    To calculate your province’s land transfer tax, and view eligibility requirements for rebates in BC, PEI, Ontario and Toronto, visit RateHub.ca.