Unlocking Homeownership in Canada: Incentives and Programs for Buyers

Buying a home in Canada, especially for first-time buyers, can feel like an uphill battle. Thankfully, an array of government programs and incentives aim to ease the burden and make homeownership more accessible. Let’s dive into the key resources available to Canadian homebuyers today:

1. First Home Savings Account (FHSA)

Launched in April 2023, the FHSA is a game-changer for first-time buyers. This registered account allows Canadians to save up to $8,000 annually, with a lifetime limit of $40,000, specifically for a home purchase. Contributions are tax-deductible, and withdrawals for a home are tax-free, making it an unparalleled tool for growing your down payment. Financial expert David Chilton even dubbed it “the greatest deal in the history of Canadian savings.”

2. Home Buyers’ Plan (HBP)

Introduced in 1992, the HBP lets first-time buyers withdraw from their RRSPs tax-free to fund a down payment. The limit recently increased to $60,000 per individual (or $120,000 for couples) as of Budget 2024. While the funds must be repaid within 15 years, this program has long been a cornerstone for helping Canadians enter the housing market.

3. Land Transfer Tax Rebates

In provinces like Ontario, British Columbia, and Prince Edward Island, as well as in Toronto, first-time buyers can receive rebates on land transfer taxes. These savings can significantly reduce closing costs, making homeownership more attainable.

4. First-Time Home Buyers’ Tax Credit (HBTC)

This credit offsets some of the costs of buying a home. In December 2022, the federal government doubled the non-refundable tax credit to $10,000, providing up to $1,500 in tax relief for eligible buyers.

5. GST/HST New Housing Rebate

For those purchasing new-build homes, pre-construction properties, or undertaking major renovations, this rebate helps recover a portion of the GST or HST, with the amount depending on the home’s purchase price.

6. Local and Provincial Programs

In addition to federal initiatives, many provinces and municipalities offer targeted support. These include down payment assistance programs and affordable housing incentives designed to meet local needs, providing more options to first-time buyers across the country.

Addressing Housing Supply Challenges

Affordability isn’t just about access to funding; it’s also about increasing the housing supply. Several programs aim to tackle this issue:

• Secondary Suite Loan Program: Offers loans up to $80,000 at a 2% interest rate for homeowners to build rental units within their properties, encouraging more rental supply.

• Secondary Suites Refinancing Option: Enables homeowners to refinance their mortgages to construct secondary suites, leveraging home equity to expand rental options.

• GST Holiday for Developers: Incentivizes the construction of affordable rental housing by offering rebates on the GST for new rental projects.

• Canada Housing Infrastructure Fund (CHIF): Invests in infrastructure like water systems to facilitate new housing developments.

• Public Lands for Homes Plan: Unlocks federal land to expedite the construction of affordable housing.

• Housing Accelerator Fund (HAF): A $4-billion initiative designed to encourage municipalities to adopt pro-housing policies, particularly for duplexes, triplexes, and other “missing-middle” housing types.

What This Means for Buyers

With programs like the FHSA and HBP easing financial barriers, alongside targeted efforts to boost supply, there’s never been a better time to explore your homeownership options. Whether you’re saving for your first home, navigating down payments, or looking at new-build options, these incentives offer valuable support.

Have questions about buying your first home or how these programs can work for you? Let’s connect to explore your path to homeownership! 🏡