Buying your first home is an exciting milestone, but understanding the costs and available government programs can feel overwhelming.
The good news is that first-time home buyers in Ontario may qualify for several rebates and tax savings that can help make purchasing a home more affordable.
Some programs apply only to newly built homes, while another can help eligible buyers purchasing either a new build or a resale property.
If you're planning to buy your first home in Ottawa, here are three important programs to understand before you start your search.
1. Federal First-Time Home Buyers' GST/HST Rebate
The federal government introduced a First-Time Home Buyers' GST/HST Rebate to help eligible buyers purchasing or building a qualifying new home.
For buyers in Ontario, this rebate applies to the federal portion of the 13% HST.
How much could you receive?
Depending on the purchase price and eligibility, the rebate may provide:
Up to $50,000 on a qualifying new home valued at $1 million or less.
A reduced rebate on homes valued between $1 million and $1.5 million.
No rebate on homes valued at $1.5 million or more.
The rebate applies to qualifying newly built or substantially renovated homes intended to be used as the buyer's primary place of residence. It does not apply to an ordinary resale home.
Who qualifies?
Generally, to qualify as a first-time home buyer under the federal program:
You must be at least 18 years old.
You must be a Canadian citizen or permanent resident.
You must not have lived in a home that you or your spouse or common-law partner owned during the calendar year of the purchase or the previous four calendar years.
Neither you nor your spouse or common-law partner can have previously received this first-time buyer rebate.
There are additional purchase, construction and occupancy requirements, so it is important to review the full eligibility criteria.
2. Ontario First-Time Home Buyers' HST Rebate
Ontario also offers a first-time home buyer rebate on the provincial portion of HST.
In Ontario, HST is 13%, made up of:
5% federal portion
8% provincial portion
The Ontario first-time home buyer rebate may provide up to $80,000 of the provincial portion of HST on an eligible new or substantially renovated home.
This is separate from the federal first-time home buyer rebate.
For qualifying homes valued at $1 million or less, eligible buyers may receive relief on the full provincial portion of HST, up to the $80,000 maximum. The amount is reduced for higher-priced homes, subject to the program rules.
Can you receive both the federal and Ontario first-time buyer rebates?
Yes. Eligible buyers may qualify for both programs.
For a qualifying new home valued at $1 million or less, the federal and Ontario first-time buyer rebates together may provide up to $130,000 in HST relief, subject to eligibility and the HST payable.
There is also an important point for buyers purchasing during Ontario's temporary new-home HST relief period.
Ontario's temporary Enhanced New Housing Rebate and New Home Affordability Payment are separate programs. The provincial rebates cannot simply be added together without considering the program limits, and the federal portion of the temporary payment may be reduced by another federal HST rebate the buyer is entitled to claim.
This is why it is important to have your builder and lawyer confirm how the rebates apply to your particular purchase.
3. Ontario First-Time Home Buyer Land Transfer Tax Refund
Unlike the HST rebates, Ontario's Land Transfer Tax (LTT) refund may apply to both newly built and resale homes.
When you purchase a property in Ontario, land transfer tax is generally payable when ownership is transferred.
Eligible first-time home buyers may receive a refund of up to $4,000.
For many buyers, this can reduce or eliminate the provincial land transfer tax payable, depending on the purchase price.
Who qualifies?
The Ontario Land Transfer Tax refund has its own eligibility rules, which are different from the federal and provincial HST programs.
Generally:
You must be at least 18 years old.
You must be a Canadian citizen or permanent resident.
You must occupy the home as your principal residence within nine months of the transfer.
You must never have owned an eligible home, or an interest in one, anywhere in the world.
If you have a spouse, your spouse must not have owned an eligible home while you were spouses.
Land Transfer tax applies to resale home and new build home.
One important distinction: the land transfer tax program generally uses a lifetime home-ownership test. This is different from the federal HST rebate, which looks at whether you or your spouse lived in a home you owned during the current or previous four calendar years.
The refund is generally claimed through the lawyer handling your purchase and registration.
New Build or Resale: Which Benefits Apply?
One of the most important things to understand is that the available programs depend on the type of home you purchase.
If you buy a qualifying new build:
You may be eligible for:
Federal First-Time Home Buyers' GST/HST Rebate.
Ontario First-Time Home Buyers' HST Rebate.
Ontario Land Transfer Tax Refund.
Other applicable new-home HST relief, depending on your eligibility and purchase agreement.
If you buy a resale home:
You may be eligible for:
Ontario Land Transfer Tax Refund.
The federal and Ontario first-time home buyer HST rebates are for qualifying new or substantially renovated homes, not ordinary resale properties.
An Example: Buying Your First Home in Ottawa
Let's say Taylor is purchasing a newly built home in Ottawa for $850,000.
Taylor meets the first-time buyer eligibility requirements and intends to live in the home as a primary residence.
Depending on the purchase agreement, the HST payable and the applicable program rules, Taylor may qualify for:
Federal first-time buyer HST rebate: up to $42,500, representing 5% of the $850,000 purchase price.
Ontario first-time buyer HST rebate: up to $68,000, representing 8% of the purchase price.
Potential combined HST relief: up to $110,500.
Taylor may also qualify for the Ontario Land Transfer Tax refund of up to $4,000.
This is an illustration of the potential benefits, not a guaranteed rebate calculation. The temporary Ontario programs and other applicable rebates may affect the final amounts, so the purchase agreement and eligibility should be reviewed carefully.
A Few Things to Do Before Buying Your First Home
Before signing an Agreement of Purchase and Sale, take time to understand the costs and benefits available to you.
Here are a few practical steps:
Confirm your eligibility. The federal HST rebate, Ontario HST rebate and Land Transfer Tax refund each have different requirements.
Understand the type of property. New builds and resale homes are treated differently for HST purposes.
Ask about builder pricing. Find out whether applicable rebates are included in the advertised purchase price or credited at closing.
Review the purchase agreement. Have your real estate lawyer review the HST provisions and rebate arrangements before signing.
Budget for closing costs. Remember that land transfer tax, legal fees, adjustments, moving expenses and other costs may still apply.
Keep your paperwork. Make sure you understand which applications and supporting documents are required.
Planning to Buy Your First Home in Ottawa?
Buying your first home involves more than finding the right property. Understanding your budget, the purchase process and the programs available to you can make a meaningful difference.
Whether you're considering a newly built home or a resale property, I can help you navigate the Ottawa market, understand the buying process and make informed decisions along the way.
If you're thinking about buying your first home in Ottawa, I'd be happy to help you get started.
Shelley Snyder
Ottawa Realtor | Coldwell Banker Coburn Realty, Brokerage
Buyers • Sellers • Downsizers
613-854-4452
shelley@shelleysnyder.com
Disclaimer: This article is for general informational purposes only and is not tax, legal or financial advice. Government rebate programs have specific eligibility requirements, dates and conditions. Rebate amounts are not guaranteed. Confirm your circumstances with the Canada Revenue Agency, the Ontario Ministry of Finance, your real estate lawyer and your tax professional before relying on any rebate.
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