There are many programs, grants and incentives available for home buyers in Ontario. These are intended help make housing more affordable and accessible to those looking to purchase. Some programs help eliminate risks associated with the ownership of new construction as well.
First-Time Home Buyers’ Tax Credit
The Home Buyers’ Tax Credit (HBTC) offers a $5,000 non-refundable income tax credit amount on a qualifying home acquired. For an eligible individual, the credit will provide up to $750 in federal tax relief. For 2022 and subsequent taxation years, the Budget proposes to increase the amount used to calculate the HBTC to $10,000, which would provide a tax credit of up to $1,500 to eligible home buyers.
Land Transfer Tax Refund
When you buy land or an interest in land in Ontario, you pay land transfer tax. First-time home buyers of an eligible home may be eligible for a refund of all or part of the tax.
No land transfer tax is payable by qualifying first‑time purchasers on the first $368,000 of the value of the consideration for eligible homes. The amount greater than $368,000 receives a maximum refund of $4,000.
To claim a refund, you must be at least 18 years of age. You or your spouse cannot have owned a home or an interest in a home anywhere in the world. The method of acquiring the home (e.g., purchase, gift or through an inheritance) is not relevant. If multiple buyers, the refund will be proportionate to the interest acquired by the individuals who qualify for the refund.
You cannot re‑qualify as a first‑time homebuyer. This rule may be different from other federal programs for first‑time homebuyers (e.g., the Canada Revenue Agency Home Buyers’ Plan). If the refund is claimed at the time of registration, it may offset the land transfer tax that would be payable. If the refund is not claimed at registration, the tax must be paid, and a claim for the refund may be submitted to the Ministry of Finance. No interest is paid on this refund.
RRSP Home Buyers’ Plan
The Home Buyers’ Plan (HBP) is a program that allows you to withdraw up to $25,000 in a calendar year from your registered retirement savings plans (RRSPs) to buy or build a qualifying home.
- You must be considered a first-time home buyer.
- There must exist a written agreement to buy or build a qualifying home for yourself.
- The intention is to occupy in the qualifying home as your principal place of residence within one year after buying or building it. If you buy or build a qualifying home for a related person with a disability, or help a related person with a disability buy or build a qualifying home, you must intend that that person occupies the qualifying home as his or her principal place of residence.
If you have previously participated in the HBP, you may be able to do so again if your repayable HBP balance on January 1st of the year of the withdrawal is zero and you meet all the other HBP eligibility conditions.
First Home Savings Account
A First Home Savings Account (FHSA) is a registered plan allowing you, as a prospective first-time home buyer, to save for your first home tax-free (up to certain limits). You can open an FHSA starting April 1, 2023. To open an FHSA, an individual must be a resident of Canada and at least 18 years of age. In addition, an individual must be a first-time home buyer, meaning that they have not owned a home in which they lived at any time during the part of the calendar year before the account is opened or at any time in the preceding four calendar years. The current lifetime limit on contributions is $40,000, with an annual contribution limit of $8,000.
An FHSA of an individual would cease to be an FHSA, and the individual would not be permitted to open an FHSA, after December 31 the year in which the earliest of these events occurs:
- The fifteenth anniversary of the individual first opening an FHSA; or
- The individual turns 71 years old.
Any savings not used to purchase a qualifying home could be transferred on a tax-free basis into an RRSP or Registered Retirement Income Fund (RRIF) or would otherwise have to be withdrawn on a taxable basis. Individuals that make a qualifying withdrawal could transfer any unwithdrawn savings on a tax-free basis to an RRSP or RRIF until December 31 of the year following the year of their first qualifying withdrawal.
HST New Housing Rebate
The purchase price of resale homes are exempted from the HST whereas the purchase price of newly constructed homes are not. The HST New Housing Rebate program allows you to claim a rebate on part of the HST you pay on the purchase price or cost of building your new house, substantially renovating or building a major addition onto your existing house, or on converting a non-residential property into a house.
Tarion New Home Warranty Protection
A new home must meet or surpass the structural requirements and health and safety standards of the Ontario Building Code. Buyers of resale homes that are less than seven years old will benefit from Tarion coverage. Statutory warranty protection follows the home and is valid for seven years from the original date of possession, regardless of who owns the home.