The First-Time Home Buyers Tax Credit (HBTC) is a non-refundable tax credit of $10,000 provided to a first-time homebuyer who purchases a qualifying home. It is one of several programs designed to make buying your first home in Canada more affordable for the average Canadian. If you’re navigating the housing market for the first time, it’s essential to understand what this credit is, how much you can claim, who qualifies, and how to apply it during tax season.

What Is the First-Time Home Buyers’ Tax Credit?

The First-Time Home Buyers’ Tax Credit (HBTC) is a non-refundable federal tax credit designed to help Canadians with the costs associated with purchasing their first home.

Eligible buyers can claim a $10,000 amount on their tax return, which translates to a $1,500 federal tax reduction. Because the HBTC is non-refundable, it lowers your overall tax payable but doesn’t generate a refund if you owe nothing. This can be particularly helpful for offsetting upfront closing costs, especially in high-cost real estate markets like Toronto or South Etobicoke.

For couples or joint purchasers, the $10,000 credit can be split between two eligible individuals, but the total combined claim must not exceed $10,000. This means that even if two first-time buyers are purchasing together, the tax credit still maxes out at $1,500 in total.

About to buy your first home? Check out these blogs for more advice!

Who Qualifies for the First-Time Home Buyers’ Tax Credit?

To be eligible for the First-Time Home Buyers’ Tax Credit, you must meet the following criteria:

  • You or your spouse/common-law partner must have purchased a qualifying home in Canada.
  • Neither of you must have owned a home that you occupied as a principal residence in the year of purchase or in the previous four years.
  • You must intend to live in the home within one year of purchase.
  • The home must be a qualifying property, including detached homes, semi-detached homes, townhouses, mobile homes, condos, and apartments located in Canada.

Special considerations apply for individuals with disabilities. If you qualify for the Disability Tax Credit (DTC), you may claim the HBTC even if you have previously owned a home, as long as the new property is more accessible or better suited to your needs.

How To Claim the First-Time Home Buyers’ Tax Credit

Claiming the tax credit is straightforward and happens during the personal income tax filing process. On your tax return (specifically Line 31270 of the T1 General Income Tax and Benefit Return), you enter the $10,000 amount if you qualify. The CRA will then apply the 15% federal tax rate to calculate your $1,500 reduction.

In case of any issues or questions, be sure to retain all documentation from your home purchase, including the Agreement of Purchase and Sale and any closing statements. If you’re splitting the credit with your spouse or partner, decide in advance how you want to divide the $10,000 claim. Lastly, use certified tax software or consult a professional to ensure your claim is made correctly, especially if you’re combining this credit with other tax incentives.

If you forget to claim the HBTC the year you purchased your home, don’t worry. You can still request a reassessment for a previous tax year, provided it falls within the CRA’s reassessment time limits. Typically, that is up to 10 years.

Buying a home is a complex process. Check out these blogs to learn more about what you can expect when you head to the market.

There Are More Programs For First-Time Homebuyers In Toronto

In addition to the federal HBTC, Ontario also offers its own provincial incentives.

The Ontario Land Transfer Tax Refund for First-Time Homebuyers is particularly valuable, offering up to $4,000 in provincial rebates.

Additionally, Toronto residents may qualify for a rebate on the city’s municipal land transfer tax, potentially saving another $4,475.

When combined with the HBTC, these rebates can significantly reduce your out-of-pocket costs at closing. For many first-time buyers, especially in high-demand areas, these savings make the difference between affordability and being priced out.

Are you looking to buy a home in Etobicoke or Toronto? Contact us at Adrian + Andrea to see what the market looks like. Reach out at info@adrianandrea.com or call (416) 319-6893 for more information.