Affording a property can be very challenging, especially for first-time buyers. Here are 4 government incentives and exemptions that can help you save.
1. RRSP Home Buyers’ Plan (HBP)
The HBP allows first-time buyers to borrow from their Registered Retirement Savings Plan (RRSP) to use as a down payment - you’re basically borrowing money from yourself, tax-free. If you’re eligible, you can access up to $35,000 per person, and a couple can access $70,000 if they’re buying together.
The nice thing is, you can qualify for this plan even if you’re not actually buying for the first time. Basically, as long as you and your partner haven’t owned a home for the last four years and have repaid the amount you borrowed, you can borrow from your RRSP again.
You have 15 years to pay it back - each year, you’re required to repay 1/15th of the outstanding balance, but you’re free to repay larger chunks if you have them. If you don’t repay the plan in a given year, the amount you don’t pay is added to your total income for the year and you’re taxed on it. Learn more about the HBP
2. Tax-Free First Home Savings Account
This baby is brand new – it just came into effect on April 3, 2023. With the FHSA, you can contribute $8K a year – to a max of $40K. Unlike the First-Time Home Buyers’ Plan, you don’t have to pay it back, and you can combine the two programs to help you get to your goal faster.
Read more: Tax-free savings tools to help you buy your first home
3. First-Time Home Buyers’ Tax Credit
This is a tax credit that’s calculated by multiplying the lowest personal income tax rate for the year by $5,000 for a max refund of $750. You can claim it on your tax return for the year in which you made the purchase. Eligibility is the same as for the RRSP plan: you can apply for it if you or your partner haven’t owned a home in the last four years. Learn more about the tax credit
4. Land transfer tax refunds
When you buy a condo, you pay a provincial land transfer tax upon closing that’s based on the purchase price. And if you’re buying in Toronto, you get a double tax whammy: the City of Toronto also charges a municipal land transfer tax. But good news: as a first-time buyer, you may be eligible for an Ontario Land Transfer Tax rebate of up to $4,000. For the Toronto tax, it's a max of $4,475. Talk to your agent and lawyer for more details.
Hopefully this info helps you breathe a little easier: as a first-time buyer, you could be eligible for a lot of savings! For a more detailed list (and info on rebates for specific types of properties and locations), go here.
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