If there’s one constant complaint in Canadian real estate, it’s that homes are too expensive and in short supply.
And from our perspective — as discussed often on the infamous Toronto Realty Blog — that probably isn’t going to change any time soon.
The term “housing crisis” gets thrown around so often now that it almost feels like it has lost its meaning. But whether you lean conservative, liberal, or somewhere in between, most people would likely agree on one thing: government needs to do something.
Over the years, various levels of government have stepped in with programs designed to help buyers enter the market. Some have worked better than others. Here’s a brief look at the main government incentives available to first-time home buyers today.
Home Buyers’ Plan
The Home Buyers’ Plan allows eligible buyers to withdraw funds from their RRSP to put toward the purchase of a qualifying home.
The limit is now $60,000 per individual, up from the previous $35,000 limit. For a couple, that could mean up to $120,000 from RRSPs toward a down payment, assuming both qualify. The funds must be repaid over time, so this is really more of an interest-free loan from your future self than free money.
For more first-time home buying resources, check out these posts next:
- Fixed Rate Vs. Variable Rate Mortgages: A Guide for Buyers
- How Much Does a Home Inspection Cost?
- Do You Really Need a Buyer’s Agent?
Tax-Free Savings Account
The TFSA was not created specifically for housing, but it has become a major savings tool for first-time buyers.
Unlike an RRSP, contributions are not tax-deductible, but investment growth and withdrawals are tax-free. For disciplined savers, this can be an incredibly useful account when building a down payment.
Buying your first home is incredibly exciting, and maybe a little stressful. Find out exactly what you can expect with our Ultimate Guide to Buying Your First House.
Land Transfer Tax Rebates
Rebates are a slightly strange form of “incentive” when you consider that they are simply refunds against taxes the government already charges.
In Ontario, eligible first-time buyers can receive a provincial land transfer tax rebate of up to $4,000. In Toronto, buyers may also qualify for a municipal land transfer tax rebate of up to $4,475.
That sounds helpful — and it is — but in Toronto, where buyers pay both provincial and municipal land transfer tax, there can still be a substantial bill owing even after the rebates.
First Home Savings Account
The FHSA is arguably the best first-time-buyer savings tool we’ve seen.
Eligible buyers can contribute up to $8,000 per year, with a lifetime contribution limit of $40,000. Contributions are generally tax-deductible, and qualifying withdrawals to buy a first home are tax-free. In other words, it combines some of the best features of both an RRSP and a TFSA.
Keep reading these posts next for even more tips and advice for buying a home in Toronto:
- What Not to Do Before Buying a House
- What to Expect at a House Viewing
- Things that Fail a Home Inspection
First-Time Home Buyer Incentive
This one is worth mentioning mostly because it’s a good example of a program that sounded better in theory than it worked in practice.
The federal First-Time Home Buyer Incentive is no longer accepting applications. The deadline for new submissions was March 21, 2024, and no new approvals were granted after March 31, 2024. You can read more about the discontinued program here First-time homebuyer incentive is discontinued, says federal housing agency | CBC News
Home Buyers’ Amount
First-time buyers may also be eligible for the federal Home Buyers’ Amount, which allows a claim of up to $10,000 on a qualifying home purchase. This can result in a federal tax credit of up to $1,500.
Do you still have questions about buying your first home? Download our FREE Home Buyer’s Guide today.
Final Thoughts
None of these programs solves the real affordability problem in Toronto. A rebate here, a tax credit there, or a tax-sheltered savings account can help, but they don’t change the underlying issue: housing remains expensive, and supply remains constrained.
That said, when combined — RRSP withdrawals, TFSA savings, FHSA contributions, land transfer tax rebates, and federal tax credits — these incentives can make a meaningful difference for first-time buyers trying to get into the market.
Whether you’re buying your first home in Toronto, or you’ve been on the property ladder for a while now, Toronto Realty Group is your source for exceptional real estate advice and full-service designed to make the buying process easy, stress-free, and profitable. Get in touch today by filling out the form on this page or by calling/emailing us directly.
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