First-Time Homebuyer Refund

Buying

In Ontario, when you purchase land or property, you pay land transfer tax that is based on the final purchase price of the property. The good news is that as a first-time homebuyer, you may be eligible for a refund of up to $4,000 which can represent all or part of the land transfer tax payable.

To be eligible to claim this refund, you must satisfy the following requirements:

1. The purchaser must be at least 18 years old.

2. The purchaser must occupy the home as their principal residence within nine months of the date of transfer.

3. The purchaser cannot have ever owned an eligible home, or an interest in an eligible home, anywhere in the world, at any time.

4. If the purchaser has a spouse, the spouse cannot have owned an eligible home, or had any ownership interest in an eligible home, anywhere in the world, while he or she was the purchaser’s spouse. If this is the case, no refund is available to either spouse.

5. The purchaser must be a Canadian citizen or permanent resident of Canada.

The requirements make it clear that you do not qualify for the refund if you have previously owned a home. If you are eligible, you will be able to claim it instantly at the time of closing. This means that you will not need to pay the entire land transfer tax upfront. You will only pay the difference (if any).

However, it is not always that simple.

For instance, if your spouse owns a property while you are spouses of one another, then you do not meet the requirements unless they sold their property prior to becoming your spouse.

Another common situation is when two first-time homebuyers are purchasing the same property together. In that case, they cannot each claim a refund of up to $4,000 for a total of $8,000. The maximum refundable amount in this situation is still $4,000.

Let’s go through a few examples to illustrate how it all works.

Example 1: Chris is a qualifying first-time homebuyer and he purchases a condo for $350,000. The land transfer tax payable is $3,725. Chris will receive a refund equivalent to the land transfer tax amount.

Example 2: Carla is a qualifying first-time homebuyer and she is purchasing a townhouse for $460,000. The land transfer tax payable is $5,675. Carla will receive a refund of $4,000. She will pay $1,675 in land transfer tax.

Example 3: John and Andrew are qualifying first-time homebuyers and are purchasing a single-family home for $640,000. The land transfer tax payable is $9,275. John and Andrew will receive a total refund of $4,000. They will pay $5,275 in land transfer tax.

Ontario’s First-Time Homebuyer Refund is a great opportunity to save money during what can be a very expensive time. Beyond the examples covered in this article, there are various situations that may affect your eligibility to claim the full refund. For example, what if you are purchasing your first home with a parent? What if you are purchasing an investment property? Consider speaking with a lawyer to know whether you qualify and how to make the most of it.

Reposted with permission from Mathieu Glémet, Ottawa real estate lawyer. Disclaimer: The content of this article is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Readers are advised to seek specific legal advice.

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