The First-Time Home Buyers’ Tax Credit, or HBTC, is meant to make home ownership more affordable for eligible Canadians.
After the passage of new legislation in December of 2022, eligible first-time home buyers can claim a $10,000 non-refundable income tax credit — double what they could before — which could result in tax savings of up to $1,500.
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How the First-Time Home Buyers’ Tax Credit works
Claiming the HBTC is as straightforward as it gets. There’s no need to apply or be approved.
When you do your taxes for the year in which you purchased your first home, enter the Home Buyer’s Amount of $10,000 on Line 31270 of your income tax return. (The amount is calculated at the lowest personal tax rate, which is presently 15%.) The government allows you to split the amount with your spouse or common-law partner, but your combined total claims must not exceed $10,000. The credit results in a $1,500 rebate on the taxes you owe for the year.
If you owe less than $1,500 in taxes, you can only reduce your taxes to $0. You won’t get an additional refund as this is a non-refundable tax credit. Keep all your home buying documentation in case the CRA requires proof of eligibility.
First-Time Home Buyers’ Tax Credit eligibility
To be eligible to claim the HBTC, you (or your spouse or common-law partner) must:
- Buy a qualifying home registered in your (or your spouse’s or common-law partner’s) name. It can be an existing property or under construction and includes single-family structures, townhouses, condo units and more.
- Be a first-time home owner, meaning that you did not reside in a property that you or your spouse or common-law partner owned in the previous four years.
- The qualifying home must become your principal place of residence within one year after it’s bought or constructed.
Eligible persons with a disability can apply for the tax credit without needing to be a first-time home buyer.
Properties that qualify for the First-Time Home Buyers’ Tax Credit
You’ll only be able to take advantage of the HBTC if you purchase a qualifying home. The list of acceptable homes includes:
- Single-family houses.
- Townhomes and semi-detached houses.
- Apartments and condo units.
- Mobile homes.
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Other assistance for Canadian home buyers
In addition to the HBTC, the federal government offers several other programs to help you afford your first property. Since they are separate offerings, you can claim the tax credit and reap the benefits of these programs, too.
- The Home Buyers’ Plan allows first-time home buyers to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) tax-free. You must repay the amount within 15 years.
- The First-Time Home Buyer Incentive is a shared equity program offered by the Government of Canada. The government lends eligible home buyers either 5% or 10% of a property’s purchase price to put toward the down payment. The loan is tax free and must be repaid within 25 years, or when the house is sold.
- The GST/HST New Housing Rebate allows someone buying an eligible newly constructed home to recover some of the GST, or the federal part of the HST, they’re required to pay.
Some provinces may offer home buying programs specifically designed to make homes more affordable for first-time buyers, too. Both British Columbia and Ontario, for example, have a land transfer tax refund first-timers can access. Check with your municipal government to see what incentives might be available in your province.
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Frequently asked questions about the First-Time Home Buyers’ Tax Credit
The First-Time Home Buyers’ Tax Credit, or HBTC, can lower your taxes by up to $1,500 in the year you purchased your home.
No, these are two different programs. The HBTC is a non-refundable tax credit, while the FTHBI is a loan provided by the federal government.
The First-Time Home Buyer Incentive is a shared-equity program that lends buyers 5% or 10% of a home’s price to reduce their mortgage costs.