Tax Tips for First-Time Home Buyers in Ontario

As a first-time home buyer in Ontario, you have access to valuable tax credits and rebates at both the federal and provincial levels. Purchasing your first home in 2025? Tax breaks like the First-Time Home Buyers’ Tax Credit (worth up to $1,500) and the Ontario Land Transfer Tax Rebate (up to $4,000) can significantly reduce your costscanada.ca. This guide covers key incentives – including RRSP Home Buyers’ Plan withdrawals and the new First Home Savings Account – plus practical tips on eligibility and documentation. Read on to learn how to make the most of these tax benefits and navigate CRA requirements for maximum savings.

Federal Tax Breaks for First-Time Buyers

First-time buyers can claim several federal tax incentives:

• First-Time Home Buyers’ Tax Credit (HBTC): A non-refundable credit based on a $10,000 amount – worth up to $1,500 in tax savingscanada.ca. You claim this on line 31270 of your tax return for the year you close on the home. (Couples can split the $10,000 amount, but the total credit remains $1,500.)
• Home Buyers’ Plan (HBP): You can withdraw up to $60,000 tax-free from your RRSP to buy or build a qualifying homecanada.ca. (This limit was raised from $35,000 in 2024.) You must start repaying it to your RRSP over 15 years, but you can also delay the first payment by up to 3 years (for withdrawals made by 2025).
• First Home Savings Account (FHSA): A new registered account that lets you save up to $8,000 per year (to a $40,000 lifetime max) on a tax-deductible basiscanada.ca. Withdrawals from the FHSA are tax-free if used to buy a first home. You can even use both the HBP and an FHSA for the same purchase, provided you meet all conditions.
• GST/HST New Housing Rebate: If you buy or substantially renovate a new home, you may recover some of the GST or federal portion of the HST paid. (Eligibility and rebate amounts vary by price and location.) Note that the federal government has also proposed a new First-Time Home Buyer GST/HST rebate – 100% of GST (up to $50,000) on new homes up to $1 million, and a phased rebate up to $1.5 million – to work alongside the existing new-home rebate.
• First-Time Home Buyer Incentive (Shared Equity Program): Note: The CMHC shared-equity Incentive (5–10% down payment assistance) ended in 2024. No new applications were accepted after March 2024cmhc-schl.gc.ca, but existing participants will continue to follow the original rules.

Ontario Provincial and Municipal Benefits

Ontario offers its own homebuyer rebates, plus Toronto adds a local rebate:

• Ontario Land Transfer Tax Rebate: The Ontario government refunds up to $4,000 of the provincial land transfer tax for qualifying first-time buyers. You must apply within 18 months of closing. (In practice, homes up to ~$368,000 incur $4,000 LTT and can be fully rebated.)
• Toronto Municipal LTT Rebate: First-time buyers of residential properties in Toronto can also get up to $4,475 back on the City’s land transfer taxtoronto.ca. Eligibility rules are similar (age 18+, must occupy the home, no prior ownership anywhere).
• Ontario HST New Housing Rebate: For new homes, Ontario already rebates up to $24,000 of the 8% provincial HST. In fall 2025, the government proposed an expanded rebate: 100% of the provincial HST on first-time buyers’ new homes up to $1 millionlaurasmithmpp.ca (mirroring the federal proposal). When combined with the existing federal rebate, total savings on the HST could reach $130,000 for qualifying new homes (province + federal rebate)laurasmithmpp.ca. These measures are subject to legislative approval.
• Other Credits: Ontario has no extra first-time homeowner tax credit. However, disabled buyers may qualify for the Ontario Home Accessibility Tax Credit and Multigenerational Renovation credit if renovating for accessibility or secondary suites.

Eligibility and Documentation Tips

To claim these benefits, be sure you meet the basic criteria and have paperwork in order:

• Meet the “First-Time” Definition: You (and your spouse/common-law partner) must not have owned a home in the last 4 years. You must be a Canadian citizen or PR, at least 18, and plan to occupy the home as your principal residence shortly after closingtoronto.cathemortgageadvisors.ca.
• Gather Key Documents: Keep your Agreement of Purchase and Sale, the Deed/Transfer/Title, and Land Transfer Tax forms. For tax credits, save RRSP contribution slips (for HBP) and FHSA statements. Also have government IDs and proof of citizenship/PR status ready.
• File Your Taxes Promptly: The CRA requires that you file your income tax return to access credits and refunds. “Filing your income tax return is the first step to qualify for any benefits, credits or other tax incentives” like homebuyer credits. Be sure to claim the HBTC (enter $10,000 on line 31270) and report any HBP withdrawals or FHSA contributions in the tax year you purchase.
• Apply on Time: Ontario’s LTT rebate must be claimed within 18 months of registration (though you can apply at closing for an instant rebate). If you miss the deadline, you can still apply directly to the Ministry of Finance after closing (with the transfer documents). Similarly, keep track of the 90-day/18-month deadlines for any municipal or federal rebate applications (e.g. eventual GST/HST FTHB rebate applications).

Maximizing Your Refunds

To make the most of these credits and rebates:

• Combine Incentives Wisely: You can use multiple programs together. For example, you could withdraw $40,000 from an RRSP and $8,000 from an FHSA for the same home purchase if eligible. Use both your maximum FHSA and HBP allowance if possible.
• Top Up RRSPs Before Withdrawing: If you plan an HBP withdrawal, maximize your RRSP contributions before the deadline (March 1) to increase what you can withdraw.
• Coordinate Spousal Claims: If you and your partner buy together, you can split credits. For instance, one spouse can claim the full $10,000 HBTC amount on line 31270 if they have at least $1,500 in tax payable, or you can divide it to optimize both refundsturbotax.intuit.ca.
• Check for HST Rebates: If your purchase is a new home or major renovation, see if you qualify for the GST/HST New Housing Rebate. Also watch for the new first-time HST rebate (for homes up to $1.5M) once it launches.
• Stay Compliant: File required forms (e.g. Form T1036 for HBP withdrawals), and remember to repay your HBP on time each year or report missed payments. Keep receipts for any renovation work if you plan to claim related credits.

Take Action Now

First-time homebuyer incentives are great ways to lower your costs, but you must actively claim them. Review your eligibility early in the buying process and consult a tax professional to ensure you don’t miss out. For personalized advice, contact our team or subscribe to our newsletter for the latest updates on homebuyer tax credits. Let us help you make your first home purchase as affordable as possible!