What Can You Claim as a First-Time Home Buyer in Canada?

Understanding the Home Buyers’ Tax Credit and FHSA

Buying your first home is a major milestone – but it also comes with a long list of expenses: from the down payment and legal fees to land transfer tax. Fortunately, Canada offers several tax incentives specifically designed for first-time home buyers – and if you know your entitlements, you could claim thousands in tax refunds.

The two most important programs to understand are:

• Home Buyers’ Tax Credit (HBTC)

• First Home Savings Account (FHSA)

Let’s dive into the details of each and see how to maximize these benefits for yourself or your loved ones.

1. Home Buyers’ Tax Credit (HBTC): Up to $1,500 Refund

▸ What is it?
HBTC is a non-refundable tax credit for first-time home buyers in Canada.

If eligible, you can claim $10,000 on your tax return, resulting in a refund of about $1,500.

▸ Who qualifies?

• You are considered a first-time home buyer: you haven’t owned a principal residence in the last 4 years

• You purchased a qualifying property (detached home, condo, townhouse, etc.)

• You intend to live in the home within 1 year of purchase

• You may still qualify if buying with a spouse or family member, as long as one of you is a first-time buyer

▸ How to claim it?

• File under Line 31270 on your T1 General tax return

• Claim up to $10,000, resulting in approx. $1,500 in tax relief

• If purchasing jointly, you can split the credit – but the total cannot exceed $10,000

2. First Home Savings Account (FHSA): Double Tax-Free Home Savings

▸ What is FHSA?
The FHSA is a registered savings account that combines the benefits of both an RRSP and a TFSA – created specifically for first-time home buyers.

• Contributions reduce your taxable income (like RRSP)

• Withdrawals for a home purchase are tax-free (like TFSA)

It’s one of the smartest ways to save if you're planning to buy a home in the next few years.

▸ FHSA tax benefits

• Contribute up to $8,000/year, and up to $40,000 lifetime

• Contributions are tax-deductible in the year they are made

• If funds are withdrawn for a qualifying home, no tax is owed on principal or growth

Example:
If you contribute $8,000 to an FHSA in 2025, and your annual income is ~$60,000, you could save around $1,600 in taxes that year.

▸ Conditions to use FHSA for home purchase

• You must be a first-time home buyer (haven’t owned a principal residence in the last 4 years)

• Funds must be used within 15 years of opening the account

• The home must be located in Canada and become your primary residence within 1 year of purchase

• The purchase must happen within 30 days before or up to 1 year after the FHSA withdrawal

▸ Can it be combined with RRSP withdrawals (HBP)?
Yes! You can:

• Withdraw from FHSA tax-free and

• Withdraw up to $35,000 from RRSP under the Home Buyers’ Plan (HBP)

With proper planning, you can access up to $75,000 tax-free for your first home.

3. Other Fees & Incentives for First-Time Buyers

Besides HBTC and FHSA, here are other important programs to consider:

▸ Land Transfer Tax Rebates (province-specific)
Ontario, BC, PEI, and several other provinces offer partial rebates of land transfer taxes for first-time buyers.
For example, in Ontario, you may be eligible for up to $4,000 back.

▸ CMHC Premium Rebate (mortgage insurance)
Some lenders may refund up to 25% of your CMHC mortgage insurance premium if you buy an energy-efficient home or qualify under a green incentive program.

4. Smart Financial Planning Before Buying a Home

To make the most of tax claims and government benefits:

✅ Open an FHSA early
The sooner you open the account, the more tax-free interest and investment growth you can accumulate.
Don’t wait until you’ve found a home to start saving.

✅ Plan your HBTC claim
Keep all purchase contracts, legal documents, and proof of occupancy.
You must claim HBTC in the tax year you officially take ownership.

✅ Consider RRSP withdrawal via HBP
Use the Home Buyers’ Plan to withdraw from RRSP tax-free – just remember that you’ll need to repay it within 15 years to avoid penalties.

Final Thoughts

Buying your first home is an opportunity to unlock valuable tax savings – but only if you know how to claim them.

• Claim HBTC for a tax refund of up to $1,500

• Open and contribute early to an FHSA to save tens of thousands tax-free

• Combine with RRSP HBP and land transfer rebates to optimize your overall financial plan

📞 Need help opening an FHSA, claiming HBTC, or planning your home purchase strategy?
The Tikitax team is here to support you – from early planning to post-purchase tax filing.