What Qualifies as a First-Time Homebuyer in Canada?

What Qualifies as a First-Time Homebuyer in Canada

To qualify as a first-time homebuyer in Canada, you must meet the following criteria: you cannot have previously owned a property in Canada or abroad.

However, there are exceptions. It is possible to qualify as a first-time home buyer again after owning a home under the following circumstances:

  • If you have separated from and no longer live with a spouse or partner.
  • If you purchased your first home more than four years ago, you may be able to make use of government programs to buy for a second time.

It’s important to note that the above criteria may vary depending on the program or incentive you want to access as a first-time homebuyer. For example, some programs may have additional eligibility requirements or different definitions of what qualifies as a first-time homebuyer.

For instance, the Home Buyers’ Plan (HBP) defines a first-time home buyer as: “You are considered a first-time home buyer if, in the four year period, you did not occupy a home that you owned, or one that your current spouse or common-law partner owned.

As well, the rules surrounding opening a First Home Savings Account (FHSA) state: “You will be considered to be a first-time home buyer if you did not, at any time in the current calendar year before the account is opened or at any time in the preceding four calendar years, live in a qualifying home (or what would be a qualifying home if located in Canada) as your principal place of residence that either: you owned or jointly owned or your spouse or common-law partner (at the time the account is opened) owned or jointly owned.

In addition to programs designed to make it easier to come up with a down payment, there are also provincial incentives designed to help with land transfer taxes. These, too, will have their own definition of what qualifies as a first-time homebuyer. In Ontario, for example, the eligibility requirements for the Land Transfer Tax Refund for First-Time Homebuyers are more stringent.

The purchaser cannot have ever owned an eligible home, or an interest in an eligible home, anywhere in the world, at any time.” In addition, “If the purchaser has a spouse, the spouse cannot have owned an eligible home, or had any ownership interest in an eligible home, anywhere in the world, while he or she was the purchaser’s spouse. If this is the case, no refund is available to either spouse.”

First-Time Home Buyer Incentives in Canada

Buying your first home can be daunting; however, there are incentives for first-time homebuyers to make purchasing a home easier.

  1. First Home Savings Account (FHSA): This program allows eligible individuals to save up to $5,000 per year tax-free to purchase their first home. Contributions to the account are not tax-deductible, but the interest earned on the account is tax-free.
  2. Home Buyers’ Plan (HBP): This federal program allows first-time homebuyers to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) to use towards a down payment. The money must be repaid to the RRSP within 15 years.
  3. First-Time Home Buyer Incentive (FTHBI): First-time homebuyers can borrow five or or 10 per cent of the purchase price of a home from the government in the form of a shared-equity mortgage. The program aims to help reduce monthly mortgage payments via a larger down payment.
  4. Land Transfer Tax Rebate: In many provinces, first-time homebuyers can receive a rebate on the land transfer tax they pay when purchasing a home. The rebate amount varies by province, from part of the tax to all of it.
  5. First-Time Home Buyers’ Tax Credit (HBTC): For the 2022 and subsequent taxation years, the CRA aims to raise the calculation amount for the Home Buyers’ Tax Credit (HBTC) to $10,000, resulting in a maximum tax credit of $1,500 for eligible home buyers.
  6. GST/HST Housing Rebates: The sales of new homes are generally subject to GST/HST, and these tax rebates help to offset some of the tax you paid on your home. This particular rebate is not limited to first-time homebuyers.

Remember that these programs’ eligibility criteria, maximum purchase rates, and other specifics can differ depending on the region or territory. It’s wise to investigate the programs that are accessible in your location to determine whether you are eligible and how you can benefit from them.

How RE/MAX Agents Help First-Time Homebuyers

RE/MAX agents in Canada are licensed professionals who can guide first-time homebuyers. Here is how a RE/MAX agent assists you throughout your buying journey:

Initial Consultation: The RE/MAX agent will meet with you to discuss your needs and preferences in a home, as well as your budget, timeline, and financing options.

Home Search: The RE/MAX agent will help you search for properties that meet your criteria using the Multiple Listing Service (MLS) and other resources. They may also suggest neighbourhoods, schools, and other important amenities that fit your buying profile.

Property Viewing: The RE/MAX agent will arrange property viewings and accompany you to each property, pointing out beneficial features and potential issues.

Offer Preparation: If you decide to make an offer, the RE/MAX agent will assist with preparing and submitting the proposal, including negotiation with the seller.

Closing: The RE/MAX agent will help you navigate the closing process, which includes finalizing financing, arranging for a home inspection, and completing legal paperwork.

Throughout the process, the RE/MAX agent will provide guidance and support, answering any questions you may have and ensuring they understand each step clearly. The agent aims to help you find a home that meets your needs and budget while providing a smooth, stress-free experience.

Originally published on the RE/MAX Canada Blog.

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