First time home buyers' tax credit (HBTC)

What is the First-Time Home Buyer's Tax Credit (HBTC)?

The First-Time Home Buyer's Tax Credit (HBTC) was introduced by the federal government to help make home ownership more affordable for first-time home buyers.

Eligible Canadians can claim up to $10,000 on their federal income tax during the year they purchase their first home to receive a tax credit of up to $1,500. The HBTC is non-refundable, which means it is used to reduce the amount of tax that may be owed.

How is the new tax credit calculated?

The HBTC is calculated by multiplying the lowest personal income tax rate for the year (currently 15%) by $10,000. Currently, this amount is $1,500.

How do you qualify for the tax credit?

You, and anyone you purchase the home with, must be considered a first-time home buyer to be eligible for the tax credit. The home must be used as your principle residence, and if you purchase with your spouse, common-law partner, or even a friend, then either one of you can claim the credit (or share it). However, the combined total cannot exceed $1,500.

If you are a person with a disability or are buying a house for a related person with a disability, you do not have to be a first time home buyer. See the Government of Canada website for further details.

Is the HBTC connected to the existing First Time Home Buyer's Plan?

No. Although some of the eligibility conditions are the same for the Home Buyers Tax Credit and the First Time Home Buyer's Plan, they are two different programs. Your eligibility for the Home Buyers Tax Credit will not change whether or not you also participate in the First Time Home Buyer's plan, and you can participate in both, if you qualify. To qualify, the RRSP funds you're using must be on deposit for at least 90 days. You must also provide a signed agreement to buy or build a qualifying home.