First-Time Home Buyer Tax Benefits in Canada (2024)

1. First Home Savings Account (FHSA)

The FHSA, introduced in 2023, is the most powerful tool for first-time home buyers. It combines the best features of both RRSP and TFSA:

• Tax-deductible contributions (like RRSP)
• Tax-free withdrawals for a qualifying home (like TFSA)
• Annual limit: $8,000/year
• Lifetime limit: $40,000
• Unused room: Carries forward up to $8,000/year

FHSA Eligibility

• Canadian resident 18 or older
• First-time home buyer (haven't owned a home in current year or previous 4 years)
• Neither you nor your spouse owned a home you lived in

FHSA Strategy

Open an FHSA as early as possible, even if you're not ready to buy. You have 15 years to use it, and room starts accumulating once it's open. If you never buy a home, you can transfer the funds to an RRSP without affecting your RRSP room.

2. RRSP Home Buyers' Plan (HBP)

Withdraw up to $35,000 from your RRSP tax-free for a first home. Couples can each withdraw $35,000 for $70,000 total.

Key Rules

• Must repay over 15 years (starting 2nd year after withdrawal)
• Minimum annual payment: 1/15 of withdrawn amount
• Missed payments added to taxable income
• Must be first-time buyer (no home ownership in past 4 years)

FHSA vs HBP: Can You Use Both?

Yes! You can use both the FHSA ($40,000) and HBP ($35,000) for a total of $75,000 per person. The key difference: FHSA withdrawals never need to be repaid.

3. First-Time Home Buyers' Tax Credit (HBTC)

A non-refundable federal tax credit worth $1,500 (calculated as $10,000 × 15%).

• Claim in the year you purchase your first home
• Can be split between spouses
• Also available for disabled buyers (not required to be first-time)

4. GST/HST New Housing Rebate

If you buy a newly built home, you may qualify for a rebate of some GST/HST paid:

• Federal rebate: Up to $6,300 (36% of GST on homes under $350,000)
• Provincial rebates: Vary by province (Ontario offers up to $24,000)
• Rebate phases out for homes between $350,000 and $450,000

5. Provincial Land Transfer Tax Rebates

Ontario

First-time buyers can get up to $4,000 refund on provincial land transfer tax. Toronto buyers also get up to $4,475 rebate on the municipal land transfer tax (total: $8,475).

British Columbia

First Time Home Buyers' Program: Full exemption from property transfer tax on homes up to $500,000 (partial exemption up to $525,000).

Prince Edward Island

First-time buyers exempt from real property transfer tax on the first $200,000.

Key Takeaways

• FHSA is the most powerful tool—open one now even if you're years from buying
• Combine FHSA ($40K) + HBP ($35K) for $75,000 tax-free per person
• Don't forget the $1,500 federal home buyers' tax credit
• Check provincial rebates—Ontario first-time buyers can save $8,475 in Toronto