First Time Home Buyer Tax Credit
Credits and Exemptions for First Time Home Buyers in BC
Written By: Mariko Baerg, REALTOR of Bridgewell Real Estate Group
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The Government of Canada has a number of programs to support first time home buyers in their home purchase.
As a first time home buyer, it is important that you are aware of all of the credits and exemptions available to you so that you can take advantage of them to save money.
This blog goes through all of the money saving tricks by clearly stating the exemptions and first time home buyer tax credit that you may be eligible for.
Keep reading for money saving tips for first time home buyers!
First time home buyer tax credit
The first time home buyer tax credit was introduced by the Federal Government to allow first-time buyers in Canada the opportunity to recover some of the costs associated with their purchase.
There are a number of closing costs in the home buying process, such as legal fees, inspections, appraisals and more. The First time Home Buyer’s Tax Credit is a non-refundable credit and is valued at $750.
The first time home buyer tax credit is calculated by multiplying the lowest personal income tax rate for the year by $5,000.
Do I qualify for the first time home buyer tax credit?
When you file your taxes, if you’re a first time home buyer that has purchased a qualifying home then you can claim $5,000 in the year you purchased on line 369 of your returns. This is only applicable if both of the following apply:
- you or your spouse or common-law partner acquired a qualifying home
- you are a first-time home buyer
For your home to qualify for the first time home buyer tax credit, it must:
- be registered in you or your spouse’s or common-law partner’s name in accordance with Land Title registration
- be located in Canada
Furthermore, it must be either an existing home or home under construction that is one of the following types of home:
- single-family houses
- semi-detached houses
- townhouses
- mobile homes
- condominium units
- apartments in duplexes, triplexes, fourplexes, or apartment buildings
How to claim the first time home buyer tax credit BC
When you are completing your income tax return, enter $5,000 on line 369 of your Schedule 1, Federal Tax.
When you buy a home with someone else (for example, when two people jointly own the home), the COMBINED first time home buyer tax credit cannot be more than $5,000.
Therefore, if you bought the home with your partner with a 50-50 entitlement, then you would each put $2,500 on your line 369 of your tax return. Ultimately, you can split the claim but you CANNOT each claim $5,000 – this amount must be divided up so that the total of all amounts claimed is not more than $5,000.
Additional first time home buyer exemptions in BC:
The Government of Canada and the provincial British Columbia government also offer a number of additional programs for first time home buyers. The below are exemptions that every first time home buyer should see if they qualify for an exemption.
Property Transfer Tax Exemption
Property transfer tax is a closing cost that is calculated based on the purchase price of a home. For a $500,000 home, this amount equals $8,000 – but as a first time home buyer you may qualify for a property transfer tax exemption if you meet the requirements for eligibility.
If you are a first time home buyer that is planning on using a qualifying home as your primary residence then you may be eligible for a full property transfer tax exemption.
To qualify for a full exemption, at the time the property is registered you must:
- be a Canadian citizen or permanent resident
- have lived in B.C. for 12 consecutive months immediately before the date you register the property or filed at least 2 income tax returns as a B.C. resident in the last 6 years
- have never owned an interest in a principal residence anywhere in the world at any time
As of 2024, to qualify for the exemption the home must be less than a $835,000 value, with partial exemptions up to $860,000.
GST New Housing Rebate
For newly built homes, first time home buyers are able to apply for a GST credit from the government and/or the developer.
The GST in BC is equal to 5% of the purchase price, and as a home buyer you may be eligible for a rebate of 36% of the 5% GST.
There is a full general rebate for homes that are under $350,000 that a buyer intends on living is an his/her permanent residence, and there are partial rebates up to $450,000.
Home Buyers Plan (RRSP first time home buyer)
The Home Buyers’ Plan (HBP) is a program that allows you to withdraw up to $60,000 tax-free in a calendar year from your registered retirement savings plans (RRSPs) to fund your down payment.
This can be for buying or building a qualifying home for yourself or for a related person with a disability. The money must be in your RRSP for at least 90 days before the purchase of your house for it to be valid.
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