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Savings and rebates for Canadian home buyers

saving for a down payment. Couple laughs and chats

Buying a home for the first time can be one of the most exciting adventures you can undertake. It can also be one of the scariest, particularly when you realize you’re dealing with an asset whose price tag is well into six, maybe even seven figures.

Fortunately, there are a number of rebates available to Canadian first-time home buyers. These savings opportunities can help lighten the load of this one-time massive financial outlay.

The topic (and language) of tax rebates is enough to prompt eye rolls or intense feelings of sleepiness. We get it. Reading and researching about bureaucratic ways to save money isn’t exciting. We promise to keep it as simple as possible as we break down what to do and where to go to keep (or get back) a few extra bucks available through rebates in Canada.

First-Time Home Buyers’ Tax Credit (HBTC)

Federal rebate

This tax credit is calculated by multiplying the lowest personal income tax rate by $5,000. In 2018, the lowest rate is still 15%, providing a $750 non-refundable income tax credit.

In order to qualify for the HBTC, you or your partner must not be living in a home you own in the year you purchase the new house. The HBTC is also applicable for those who are not first-time homebuyers if they are registered as disabled or are buying the house for a family member with a disability.

Learn more about the First-Time Home Buyers’ Tax Credit.

HBP – Home Buyers’ Plan

Federal rebate

The Home Buyers’ Plan is available to first-time home buyers who are purchasing or building a home and have not lived in a home they own for the past four years. The HBP allows each individual to withdraw up to $25,000 per year from your Registered Retirement Savings Plans (RRSPs) to fund the construction or purchase of a home for yourself or for a family member with a disability (for a maximum of $50,000 for each family unit).

Normally, anything you withdraw from your RRSPs is considered taxable income. Under the Home Buyers’ Plan, you can use the money without it affecting your taxes. It should be noted that any funds you borrow from your RRSPs have to be repaid. Repayments must begin two years after the home is purchased, and you have up to 15 years to repay the full amount.

Learn more about the Home Buyers’ Plan.

GST/HST New Housing Rebate

Federal rebate

The New Housing Rebate is applicable to new homes purchased for less than $350,000 and rebates the 5% federal goods and services tax (GST) portion of the harmonized sales tax (HST). There is a proportional rebate available for homes between $350,000 and $450,000, with a maximum rebate of $6,300. Homes over $450,000 are not eligible for the New Housing Rebate.

This tax rebate is also available for those who build a house, make major renovations to an existing house, or convert a non-residential property into a home.

Learn more about the GST/HST New Housing Rebate.

HST New Housing Rebate

Provincial rebate

Many provinces also offer a rebate on the provincial portion of the harmonized sales tax (HST), with the value differing according to the region. In addition to the federal 5% rate, home buyers can get an extra rebate percentage depending on their province. These include:

  • British Columbia: 7% rebate
  • Alberta: no rebate
  • Saskatchewan: 6% rebate
  • Manitoba: 8% rebate
  • Ontario: 8% rebate
  • Quebec: 9.975% rebate
  • New Brunswick: 10% rebate
  • Nova Scotia: 10% rebate
  • Newfoundland: 10% rebate
  • Prince Edward Island: 10% rebate

Learn more about how to calculate and apply for a provincial HST New Housing Rebate.

CMHC Mortgage Loan Insurance

Federal rebate

The Canadian Mortgage and Housing Association (CMHC) offer help for first-time home buyers who are not in a position to put down the typical 20% deposit for the house. By paying a fee — known as mortgage loan insurance — first-time home buyers can make a minimum down payment of 5% of the property value (up to $500,000) yet still benefit from interest rates comparable to those who make a 20% initial down payment. Over the last half-decade, many personal finance experts suggested buyers avoid these fees as a way to save money, but it turns out this advice may be wrong. By putting down less than 20% home buyers get access to much better mortgage rates and this can save them money over the long-term. Read “Why you don’t have to put 20% down.”

Learn more about CMHC Mortgage Loan Insurance.

CMHC Green Home

Federal rebate

The Canadian Mortgage and Housing Association Green Home scheme offers a rebate of up to 25% on the premiums first-time home buyers pay on CMHC-insured financing. This rebate is related to energy efficiency.

Learn more about CMHC Green Home.

Land Transfer Tax Rebate

Provincial and municipal rebates

First-time home buyers who live in certain provinces or cities can claim a rebate on some of the land transfer tax paid when the house was purchased. Those who purchase a home in British Columbia, Prince Edward Island or Ontario can qualify for a rebate equating to the full amount of their property tax transfer.

The maximum rebate available in British Columbia is $8,000, in Ontario it is $4,000, and in Prince Edward Island it is $2,000. The City of Toronto offers a municipal land transfer tax rebate in addition to the provincial rebate, up to a maximum of $4,475.

Learn more about Land Transfer Tax Rebate in British Columbia, Ontario, and Prince Edward Island.

EEIP – Energy Efficiency Incentive Program

Federal and municipal rebates

The Energy Efficiency Incentive Program offers a rebate which ranges from $50 to $1,500. Homeowners can access this rebate by upgrading household items such as appliances, heating systems, and even LED light bulbs which are energy efficient.

Learn more about the Energy Efficiency Incentive Program.

There are also a number of municipal-specific rebates available regarding energy efficiency which can be found here.

HATC – Home Accessibility Tax Credit

Federal rebate

The Canadian government offer tax rebates for those who upgrade a home to make it accessible for those with a disability. These upgrades are related to making the home more functional for those less mobile or reducing the risk of harm within the dwelling. The total eligible expenses from work performed or goods acquired can be up to $10,000.

Learn more about the Home Accessibility Tax Credit.

Home Renovation Tax Credit

Provincial rebate

White these rebates are not necessarily just for first-time home buyers, there are a number of province-specific savings available for those who raise the standards of a home to make them more energy efficient or safe for senior citizens and those with a disability. In British Columbia and New Brunswick, the credit is worth up to $1,000 per year.

Learn more about the Home Renovation Tax Credit in British Columbia and New Brunswick.

Quebec offers the Renovert tax credit which rebates up to $10,000 for upgrades to a home which make it more energy efficient or eco-friendly. Learn more about the Renovert Tax Credit.

Moving and Work-from-home rebates

Federal rebate

If, for example, your new home is at least 40 kilometres closer to your place of work or school, you can claim a rebate for your moving expenses. Also, if you work from home, you can claim a rebate on some of your utility bills according to the Business-Use-Of-Home Expenses.

Of course, all these rebates and tax credits are related to your specific circumstances and each has their own set of regulations which determine whether you are eligible or not. Make sure you explore each rebate in further detail before making any assumptions. Talk to a tax expert if you are unsure.

As an overview, Canada is eager to help first-time home buyers get their foot on the property ladder. Beyond the main programs, the majority of tax credits available are related to energy efficiency and accessibility for the disabled.

They say “it’s not what you know, it’s who you know,”well, in the world of tax credits and rebates, this rule simply doesn’t apply. In this instance, saving money is definitely a matter of what you know. Arm yourself with knowledge!

Image of Daniel Manicolo

Daniel Manicolo

Professional copywriter and former BBC Radio Journalist/Producer. Six years operating as a freelance copywriter with two years​ experience in the U.S. real estate industry. A psychology graduate with an instinct for people and the persuasive power of words.