We all know that we need to pay the tax man, but isn’t it great when he gives us money back? I definitely wouldn’t complain. Luckily, since you are a first time home buyer, you have a few options for tax credits that the experienced homeowner won’t have, and some they do. Additionally, I’m going to go over some RRSP options that you have to help you with all of your money matters in relation to the down payment for your new home.


The HBTC (Home Buyers’ Tax Credit) was created through Canada’s Economic Action Plan to aid buyers with the purchase of their first home. This credit is available to help ease the burden of closing cost payments, which can be close to 2.5% of the home’s purchase price. Closing costs are made up of legal fees, disbursements, property taxes and interest adjustments – in addition to the 5% + 10% over $500K down payment buyers are required to have. The $5000 HBTC amount is applicable to qualifying homes purchased after January 27, 2009, and provides up to $750 in Federal tax relief.

Who is eligible? To be considered a first time home buyer, you or your spouse/common law partner must not have owned and lived in a home within the year of the purchase, or any of the 4 years prior.

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First off, let’s start by explaining what Land Transfer Tax is. As with almost anything you purchase in Ontario, when you buy land, or an interest in land, you are going to have to pay a tax. When the transaction on your home closes, you will be responsible for paying Land Transfer Tax to the province the land was purchased in. The amount that you would pay is in relation to what was paid for the land, or in some instances (more so for businesses) the tax would be calculated based on fair market value.

Luckily, as a first time home buyer, you may be eligible for a refund of all or part of the taxes paid. To be eligible you must meet the following requirements:

  • Are 18 years of age or older
  • Must have the home purchased be your primary place of residence
  • Cannot have owned a home or interest in a home previously
  • If you have a spouse or common law partner, they cannot have owned a home prior to this purchase

The maximum refund that can be received is $2000, with the amount available for refund increasing in correlation with the price of the home. For examples, please see the below table:

Tax credits table Toronto Home Buyer

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Now technically, this isn’t a tax credit, but it is another way the government is trying to help ease the financial burden of buying your first home. What they have done is created a Home Buyers’ Plan, which is integrated with your RRSP. This plan allows you to withdraw up to $25,000 from your Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home. Under this plan, you would have up to 15 years to repay the amount withdrawn in order to not have the monies taxed as income – this amount can be paid at any time after withdrawal.

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She Sells Toronto Nicole Harrington Real Estate