Buying your first home in Canada is a big step—and it can come with some great perks. From the federal first-time buyer tax credit to the new GST rebate, there are ways to save thousands. This guide breaks down each benefit in simple English, with real examples, current info (2025), and handy tips so it feels like you’re chatting with a knowledgeable friend.
1. First-Time Home Buyers’ Tax Credit (HBTC)
The Home Buyers’ Tax Credit is a non-refundable federal credit. Here’s how it works:
- You can claim up to $10,000 in qualifying home costs.
- That gives a credit of $1,500 (15% of $10,000) applied against your income tax.
- It’s available in the year you or your spouse move into a home for the first time.
Example:
Emily and Noah buy their first home in BC in July 2025. They claim $10,000 and receive a $1,500 tax credit. Their tax bill drops by $1,500 that year. Best part? It’s easy to claim directly on your income tax return—no extra forms needed.
2. New First-Time Home Buyers’ GST Rebate (2025)
What’s New in 2025?
On May 27, 2025, the federal government introduced a new GST rebate specifically for first-time homebuyers.
How Much Can You Get?
- If you buy a new home under $1 million, you can get a full rebate of the 5% GST—up to $50,000.
- For homes between $1 million and $1.5 million, the rebate is reduced on a sliding scale.
- Above $1.5 million? No rebate applies.
Who Qualifies?
- Must be at least 18 and a Canadian citizen or permanent resident.
- Must be a first-time homebuyer (you and your spouse haven’t owned a home in the past four years).
- The purchase agreement must be signed between May 27, 2025 and 2030, with construction starting by 2030 and the home completed by 2036.
- It’s a one-time use benefit, and your partner can’t have claimed it before.
Bundling with Other Rebates
This rebate is in addition to the existing GST/HST New Housing Rebate, giving full relief on new builds under $1 million.
3. Province-Level Rebates & Tax Credits
Land Transfer Tax Rebates
Several provinces offer first-time buyer rebates to offset land transfer taxes at closing.
- Ontario: Up to $4,000 rebate on homes up to $368,000.
- British Columbia: 100% exemption on homes up to $500,000.
- PEI & Nova Scotia: Partial reductions available in certain regions.
Home Buyers’ Plan (HBP)
While not a credit, the HBP allows you to withdraw up to $40,000 from your RRSP to buy your first home without immediate tax. You repay it over 15 years.
4. First Home Savings Account (FHSA)
Launched in 2023, the FHSA is designed for first-time buyers:
- Contribute up to $8,000/year, with a lifetime max of $40,000.
- Contributions are tax-deductible, like an RRSP.
- Withdrawals for a qualifying home purchase are tax-free, like a TFSA.
- It can also be combined with the HBP for more flexibility.
5. How Savings Add Up: Example Scenarios
New Build Under $1M
- GST rebate: up to $50,000
- HBTC: $1,500
- Ontario LTT rebate: $4,000
- FHSA savings: up to $6,000/year in deductions
Total savings: Around $61,500 upfront, plus ongoing FHSA tax benefits.
Resale or Renovated Home + FHSA + HBP
- GST rebate not available.
- HBTC: $1,500
- FHSA + HBP withdrawals: up to $80,000 tax-free
- LTT rebates as applicable
Total financial support: $1,500 + $80,000 + provincial rebates.
6. Mistakes to Avoid
- Check eligibility dates: Only agreements after May 27, 2025 qualify for the new GST rebate.
- One-time use: You only get the GST rebate once—if your partner already claimed it, you can’t.
- Don’t miss FHSA deadlines: Must use within 15 years or transfer to an RRSP.
- Remember resale rules: GST rebate applies only to new homes.
- Apply properly: Builders often assign the GST rebate, but you must prove eligibility.
7. Claiming Your Benefits: Step-by-Step
- During purchase: Sign a qualifying new-build agreement after May 27, 2025.
- GST rebate: File Form GST190 or GST191 with CRA after taking possession.
- HBTC: Claim on your next tax return.
- LTT rebate: File at closing with the province’s land registry office.
- FHSA: Contribute and claim deduction on your tax return.
- HBP: Withdraw RRSP funds through CRA and begin repayment within 15 years.
8. Real Canadian Example
Jaspreet and Marco, first-time buyers in Toronto, sign in June 2025.
- Purchase price: $950,000
- GST rebate: $47,500
- HBTC: $1,500
- Ontario LTT rebate: $4,000
- FHSA contributions: $16,000 (over 2024–2025)
Total benefit: over $69,000 in rebates, tax savings, and FHSA withdrawals—significantly reducing their upfront costs.
9. Key Takeaways
- First-time buyer tax credit: $1,500 savings.
- New GST rebate (2025–2030): up to $50,000 on new builds.
- Provincial rebates available in Ontario, BC, and others.
- Combine with FHSA and HBP for up to $80,000 in tax-free funds.
- Plan carefully to maximize savings and avoid missing deadlines.
Conclusion
For first-time buyers in Canada, there’s never been a better time to use government programs for big savings. The first-time buyer tax credit, the new GST rebate, and provincial incentives together can significantly reduce your upfront costs. Add in smart saving with the FHSA and HBP, and you’re well on your way to a comfortable and affordable path to homeownership.
If you’d like personalized guidance, consider talking to a tax professional to make sure you claim every benefit you qualify for.
Source : fulinspace.com