First-Time Home Buyers’ Tax Credit Explained

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by Enoch Omololu

Updated

Advertiser Disclosure

The first-time homebuyers’ tax credit was introduced by the Federal Government in the 2009 Federal Budget.

The non-refundable tax credit is based on an amount of $5000 for first-time homebuyers who acquire a qualifying home. This rebate is equivalent to $750.

How Much Is The Home Buyers’ Tax Credit?

The home buyers’ tax credit is calculated using the lowest personal income tax rate for the year (i.e. 15% in 2022).

Therefore, for homes purchased in 2022, you will get a credit of $750 (calculated as $5000 x 15%) when you file your taxes next year.

Related: A Complete Guide on How To Buy a Home in Canada

Eligibility Rules for the Home Buyers’ Tax Credit

The following are required to be eligible for the first-time home buyers’ tax credit:

  • You or your spouse or partner acquired a qualifying home. A qualifying home is a housing unit located in Canada and acquired after January 27, 2009. It may be new or existing.
  • You or your spouse must be considered a first-time homebuyer. You are considered a first-time home buyer if you or your spouse have not owned or lived in a home owned by either of you for the four years prior to acquiring the new home.
  • The home must be used as your principal place of residence and you must intend to live there no later than one year after purchase.
  • You, your spouse, partner, or a friend with whom you bought the home can claim the full credit or you can share it. The total combined claim cannot exceed $750.

Claiming Your Home Buyers’ Tax Credit

You can claim the tax credit on your personal income tax return under line 369 of Schedule 1 of your Federal Tax form. See Canada Revenue Agency for more information on the HBTC.

Other First-Time Home Buyer Rebates

B. Land Transfer Tax Rebate

Land transfer tax rebates are available for first-time homebuyers in some Canadian provinces including Prince Edward Island, British Columbia, and Ontario.

The rebate amount depends on several factors such as home purchase amount, residency status of the buyer, qualification as a first-time homebuyer, use as a principal residence, etc.

C. GST/HST New Housing Rebate

This rebate applies to you if you build or purchase a new home or if you renovate an existing home that is your primary residence extensively.

The rebate applies to the GST/HST paid on the purchase and is available to all Canadians, even if they are not first-time home buyers.

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Author

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Enoch Omololu

Enoch Omololu is a personal finance expert and a veterinarian. He has a master’s degree in Finance and Investment Management from the University of Aberdeen Business School (Scotland) and has completed several courses and certificates in finance, including the Canadian Securities Course. He also has an MSc. in Agricultural Economics from the University of Manitoba and a Doctor of Veterinary Medicine degree from the University of Ibadan. Enoch has a passion for helping others win with their personal finances and has been writing about money matters for over a decade. He has been featured or quoted in The Globe and Mail, Winnipeg Free Press, Wealthsimple, Financial Post, Toronto Star, CTV News, Canadian Securities Exchange, Credit Canada, National Post, CIBC, and many other personal finance publications.

His top investment tools include Wealthsimple and Questrade. He earns cash back on purchases using KOHO, monitors his credit score for free using Borrowell, and earns interest on savings through EQ Bank.

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