First Time Buyers Get A Break on Land Transfer Tax

Wednesday Jan 11th, 2017


Starting January 1st, 2017 first time homebuyers will receive a break on the Land Transfer Tax on their first home purchase.  

In an effort to help first-time homebuyers—but not hurt the equilibrium of housing markets outside of Toronto—the Ontario Liberal government announced last fall that they will double the first-time homebuyers’ maximum Land Transfer Tax refund to $4,000.

 This will mean that eligible homebuyers in Ontario would pay no Land Transfer Tax (LTT) on the first $368,000 of their home’s purchase price.  

Home Purchase Price             Tax Rate
Up to $55,000                                 0.5%
$55,000 to $250,000                    1.0%
$250,000 to $400,000                 1.5%
$400,000 to $2-million                2.0%
$2-million and over                       2.5%

There are already a few programs in place to help first-time home buyers. These include:

Home Buyer’s Plan
First-time homebuyers have an opportunity to use their RRSP contribution towards a down payment, using the Home Buyer’s Plan (HBP). Under the federal HBP, you can withdraw up to $25,000 from any RRSP account, as long as those savings were deposited more than 90 days before your request to withdraw. (Your mortgage lender can provide the official Canada Revenue Agency form or you can get this form T1036 by going online.) Keep in mind, you have to pay back this interest-free loan over a 15-year period and any year you don’t make a payment, that annual sum is added to your income and taxed at your marginal rate. The good news is that couples can withdraw a total of $50,000 combined from their RRSP accounts, which can make a huge contribution towards a down payment. To qualify for the HBP you and your spouse must not have lived in a home owned by either person for the five years prior to using the HBP.

First-Time Homebuyer’s Tax Credit
Homebuyers who have not owned a home within the last four years may be eligible for the first-time homebuyer’s tax credit (HBTC) through the Government of Canada’s Economic Action plan. The credit is based on $5,000 multiplied by the lowest federal income tax rate for that year. For example, the lowest federal income tax rate for 2014 is 15%, so the value of the credit would be $750. You can learn more about the first time homebuyer’s tax credit on the Economic Action Plan website.

Land Transfer Tax (LTT) Refund
As a first-time homebuyer, you can receive a refund from the Ontario government of up to $4,000 of the land transfer tax you paid on your first home. (Keep in mind, other provinces have similar programs.)

GST/HST New Housing Rebate

First-time homebuyers residing in provinces that have combined provincial and federal sales tax, which includes Nova Scotia, New Brunswick, Newfoundland, Ontario, and B.C., are eligible for an HST tax rebate through the federal government.

While rebates and conditions vary from province to province, the program is designed to help with the federal portion of the HST new homebuyers have to pay. You can find out if you’re eligible for an HST New Housing Rebate, as well as all necessary application forms on Service Canada’s website.

Energy Efficient Housing
 While not restricted to first-time homebuyers, these rebates can certainly help first-time buyers.

There are a variety of rebates both at the federal and provincial levels. For instance, Genworth offers the Energy-Efficient Housing program. Available across Canada, this rebate provides a partial refund of up to 25% of the Genworth Canada insurance premium, based on the date of application for the mortgage insurance. If you bought a $300,000 home with only 5% down, you would have to pay $10,800 in insurance premiums. Under the Energy-Efficient refund program, you could save $1,620 off those premium rates. For eligibility requirements, see Genworth’s website. The Canada Housing and Mortgage Corporation offers a similar rebate and can apply to a purchase or a renovation.  


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