First-Time Home Buyer Tax Benefits in Canada (2026 Guide)

Buying your first home is a big milestone. The good news is that there are several tax programs available to help make it more affordable.

What is a First-Time Home Buyer?

You are considered a first-time home buyer if:

You (or your spouse/common-law partner) did not own and live in a home as your principal residence:

- In the year you buy the home, or
- In the previous 4 calendar years

This rule applies to Canadian and worldwide properties that you previously owned.

What this means:
You may still qualify as First-Time Home Buyer even if you own other real estate (for example, rental properties), as long as it was not your principal residence.

Income Tax Benefits

Home Buyers’ Plan (HBP)

The Home Buyers’ Plan allows you to use your RRSP savings to help fund your home purchase.

Withdraw up to $60,000 tax-free
Couples can withdraw up to $120,000 combined
Must intend to live in the home within one year of closing
Repayment over 15 years

Example:
If you withdraw $60,000, you will need to repay $4,000 per year.

If you miss a repayment, that amount is added to your taxable income.

Important tips:

Funds must be in your RRSP for at least 90 days before withdrawal
Must withdraw RRSP within 30 days after closing
If you have unused RRSP room, contributing before buying can reduce your taxes

First Home Savings Account (FHSA)

The FHSA is one of the most powerful tools for first-time buyers.

Annual contribution: $8,000
Lifetime limit: $40,000
Contributions are tax-deductible
Growth is tax-free
Withdrawals for a home purchase are tax-free

Planning tip:
Even if you are not ready to contribute, it is still a good idea to open an FHSA as unused contribution room carries forward.

For example:

Year 1: $8,000 contribution room
Year 2 (if unused): $16,000 contribution room

First-Time Home Buyers’ Tax Credit (Home Buyers Amount)

Non-refundable federal tax credit:

Claim up to $10,000 tax credit for a qualifying home (between couples of jointly owned)
Worth up to $1,500 in tax savings
Available in the year of home purchase

Moving Expenses

You may be able to deduct moving expenses if:

You move at least 40 km closer to a new job or business location

This deduction reduces your taxable income for the year.

Principal Residence Exemption

When you sell your home, capital gains are generally tax-free

However, the anti-flipping rule applies, and gains will not be tax exempted if you sell your home within one year.

GST/HST Housing Rebate

First-Time Home Buyer Programs (Current rule)

For first time home buyers who entered into new home contract on or after March 20, 2025. The rebates are as follows:

Rabate type

Max Value (Ontario)

Price Thresholds

Phrased out range

Federal enhanced (first time)

$50,000

$1,000,000 or less

$1,000,000 to $1,500,000

Ontario enhanced (first time)

$80,000

Up to $400,000 (full)

Same as federal**

**As of today, the enhanced Ontario rebate has not yet been enacted. The 2026 budget indicates that Ontario intends to align with the federal program, but until the legislation is passed, the current rules still apply. This means that for homes closing in 2026, first-time home buyers may only be able to claim up to $24,000 under the existing Ontario rebate.

New Ontario Temporary Rebate (Main Budget Measure)

The 2026 budget introduces a temporary enhanced HST rebate for qualifying new homes to agreements entered into between April 1, 2026 and March 31, 2027. The threshold will be as follow.

Home Price before HST	HST Rebate amount
Up to $1,000,000	$130,000
$1,000,001 to $1,500,000	Flat $130,000
$1,500,001 to $1,850,000	Phrased out from $130,000 to $24,000
Greater than $1,850,000	$24,000

This rebate is not limited to First time home buyers but everyone who purchases a new home for primary residence or for investment purposes.

How Connectere CPA Can Help

Buying your first home involves more than just finding the right property. The tax side can have a meaningful impact on your cash flow and long-term planning.

At Connectere CPA Professional Corporation, we can help you:

Maximize your FHSA and RRSP strategy before purchase
Plan and coordinate Home Buyers’ Plan withdrawals
Review your eligibility for GST/HST rebates
Identify additional deductions (such as moving expenses)
Ensure your structure is tax-efficient for the future

Our goal is simple: help you make informed decisions and avoid costly mistakes during one of the biggest financial steps in your life.

If you are planning to buy your first home, feel free to reach out. We would be happy to guide you through the process.

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