Grants and incentives for first-time home buyers
1. The Home Buyers’ Plan (HBP)
You can use the Home Buyers’ Plan (HBP), if you are eligible, to make a tax-free withdrawal from your registered retirement savings account (RRSP) to buy or build a home. Ideal for first-time buyers, the HBP allows each borrower to withdraw up to $60,000 ($120,000 for a couple). You then have 15 years to repay what you’ve borrowed, interest-free, starting two years after you make your withdrawal.
Who is eligible for the HBP?
Though the HBP is aimed at first-time home buyers, the program is also open to people who have not occupied a home that they or their spouse owned during the past four years. As of January 2020, eligible people who are divorced or separated can also take advantage of the program, even if they don’t meet the first-time home buyer requirement.
This means that they can use the HBP a second time to buy a new property or to buy out their ex’s share of their home, provided that their first HBP withdrawal has been repaid in full.
Note that you are also eligible for the HBP if you buy or build a qualifying home for someone related to you with a disability, or if you help someone related to you with a disability to buy or build a qualifying home. However, you must intend that the person with a disability who is related to you occupy the qualifying home as their principal place of residence.
Get ready to buy your first home:
Check out our guide for first-time home buyers to help ensure your purchase goes off without a hitch.
2. The Tax-Free Home Savings Account (FHSA)
The FHSA is a new account that allows you to save for your first home. It also allows you to make tax-deductible contributions of up to $8,000 per year, up to a lifetime maximum of $40,000. Your contribution room starts to accumulate as soon as you open your first account. You can carry forward your unused FHSA contribution room, up to a maximum of $8,000, to use in the following year.
Who is eligible for the FHSA?
To open a tax-free First Home Savings Account (FHSA), you must meet the following eligibility criteria:
- You must be a resident of Canada.
- You must be between 18 and 71 years old*
- You and your spouse must not own a home in Canada. This means you must be a first-time buyer.
Good to know:
It is now possible to transfer funds from an RRSP to a FHSA tax-free. However, the contribution limit is $8,000 annually, with a $40,000 lifetime limit.
3. Tax credits
Tax credits can also reduce some of the costs of buying your first home at both the provincial and federal levels. There are two credits for buyers who meet certain criteria.
Home buyers’ amount
You can use this credit to reduce your taxes in the year that you buy a home, provided that:
- You (or your spouse or common-law partner) acquired a qualifying home and you intend to occupy it, or have a related person with a disability occupy it, as a principal place of residence.
- You did not live in another home owned by you (or your spouse or common-law partner) during the year of acquisition or in any of the four preceding years (first-time home buyer).
The following are considered “qualifying homes”:
- Single-family homes, semi-detached homes and townhouses
- Prefabricated homes
- Mobile homes
- Condominium units
- Apartments in multi-unit residential buildings
- An ownership share in a housing co-operative that gives you an equity interest.
New housing rebates
In some provinces, including Quebec, individuals who co-own a new (or substantially renovated) home may be entitled to a partial or full tax rebate (GST and provincial sales tax), provided that the home is used as the primary residence of one of the purchasers or one of their relatives.
4. Grants and incentives offered by provinces and cities
Some provinces and territories have specific programs for home buyers. For example, you might be eligible for a grant or a tax credit for the land transfer tax (known as the “welcome tax” in Quebec). Here are some of the programs available:
- Federal: Home buyers' amount
- Alberta : PEAK Housing Initiatives Program
- British Columbia : First-time home buyers’ program
- Prince Edward Island : Real Property Transfer Tax First-Time Home Buyers Exemption
- New Brunswick : Home Ownership Program
- Nova Scotia : First-time Home Buyers’ Rebate Program
- Nunavut : Nunavut Downpayment Assistance Program
- Ontario : Land Transfer Tax Refunds for First-Time Homebuyers
- Quebec : Home Buyers’ Tax Credit
- Saskatchewan : First-Time Homebuyers’ Tax Credit
- Northwest Territories : Home Purchase Program
- Yukon : Home Owners Grant
Good to know:
In addition to the grants offered by provinces, a number of cities have their own programs to give a hand to first-time home buyers. Contact your city hall for information about the programs available.
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