First Time Home Buyer Benefits
First-time home buyers in Canada have access to several benefits that can help make the dream of homeownership a reality. These benefits include The Home Buyers’ Plan (HBP), the Tax-Free First Home Savings Account (FHSA), tax credits, and grants and incentives offered by provinces and cities.
The Home Buyers’ Plan (HBP): This plan allows first-time home buyers to withdraw up to $35,000 tax-free from their Registered Retirement Savings Plans (RRSPs) to buy or build a qualifying home. The withdrawal must be repaid to the RRSP within a 15-year period.
Tax-Free First Home Savings Account (FHSA): Introduced in 2023, the FHSA is a registered account that allows first-time home buyers to save for their first home on a tax-free basis. Contributions to an FHSA are tax-deductible, and withdrawals to buy or build a qualifying first home are tax-free. If you opened an FHSA in 2023, you can claim up to $8,000 in FHSA contributions you made by December 31, 2023, as an FHSA deduction on your 2023 income tax and benefit return.
First-Time Home Buyers’ Tax Credit (HBTC): This non-refundable tax credit allows first-time home buyers to claim a tax credit of up to $1,500 on the purchase of their first home. The credit is calculated by multiplying the lowest personal federal income tax rate by $5,000.
Provincial and City Grants and Incentives: Many provinces and cities in Canada offer additional benefits for first-time home buyers. For example, some provinces provide land transfer tax rebates, while others offer down payment assistance programs. Additionally, cities like Toronto have their own land transfer tax rebates for first-time home buyers. It's important for first-time home buyers to research the specific benefits available in their province or city.
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