Do you know you can reduce your income taxes for the year you buy a home? It’s true. If you, your spouse or common-law partner haven’t owned a home that you've lived in, in the past 4 years, or haven’t ever owned one, you may qualify for the First-Time Home Buyers’ Tax Credit (HBTC). It's also called the Home Buyers’ Amount.
What's the HBTC?
The HBTC is a federal non-refundable tax credit. It encourages Canadians to enter the real estate market by making home buying more affordable. The purchased home must be in Canada and registered with the appropriate land registry office — in your name, or in your and your spouse's or common-law partner's names.
Do I qualify as a first-time home buyer?
You may be surprised to find out who qualifies as a first-time home buyer. Eligible people sometimes miss out on the tax benefits. They assume the HBTC only applies to those who've never owned a home. Not so. If you haven’t owned a home in the past 4 years, you may also qualify for the benefits.
Do I qualify for the HBTC if I claim a disability amount on my taxes?
You may qualify for the HBTC if you claim a disability amount the year you buy a home — even if you aren’t a first-time home buyer. If you help a relative with a disability buy a home to live in, you may also qualify.
How much can I claim?
You and your spouse or common-law partner can claim a combined $10,000. At a 15% tax rate — the lowest income tax rate — the $10,000 claim equals a one-time $1,500 tax reduction. You can apply the whole $10,000 credit on your tax return, or share it with your spouse or common-law partner.
This is a non-refundable credit and will reduce the amount of taxes you owe by $750. If you don’t owe income tax the year you buy the home, there’s no benefit to claiming the HBTC.
What properties qualify for the HBTC?
Almost all types of properties you buy as your main residence in Canada qualify for the HBTC, including:
- Single-family houses
- Semi-detached houses
- Townhouses
- Mobile homes
- Condo units
- Apartments in duplexes, triplexes, fourplexes or apartment buildings
- An ownership share in a housing co-op that gives you an equity interest in the co-op
Homes under construction also qualify. You must move into the finished property within one year of the purchase closing date.
Before you buy a home or property, look for other money-saving tools or programs like the HBTC. Other Canadian government initiatives include the First Home Savings Account (FHSA) and the Home Buyers’ Plan (HBP) Opens in a dialog., which allow you to withdraw money without triggering tax if you follow plan guidelines. When choosing a mortgage, a larger mortgage payment amount and shorter amortization periodOpens in a popup. can also save you money. These reduce the interest amount you pay on the principal.
For more information about the HBTC, go to Canada Revenue AgencyOpens a new window in your browser..
