What is a First Time Home Buyer?

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One would think the term “First Time Home Buyer” (FTHB) can be simply defined.  Unfortunately, it is not.  The FTHB definition differs according to the program, CCRA HBP or Toronto Land Transfer Tax (LTT).


When discussing financing options with their mortgage specialist, buyers may consider withdrawing funds from their RRSP to put toward their down payment.  This can be done tax free under the Canada Revenue Agency Home Buyers’ Plan (HBP) so long as certain conditions are met, including the requirement for the buyer to be a FTHB.  For the purposes of the HBP, a FTHB is a person who has NOT:

-          At any time during the period beginning January 1 of the fourth year before the year of the withdrawal and ending 31 days before the date of withdrawal, you or your spouse or common-law partner owned a home that you occupied as your principal place of residence.”

This means for the HBP, one can potentially be considered to be a FTHB every five years.  FTHBs under the HBP often take this to mean they are also eligible for the FTHB land transfer tax (LTT) rebates, which gives Toronto FTHBs an instant rebate of up to $5,725 off the LTT(MLTT + Provincial Land Transfer Tax PLTT combined).  That is not so.  In order to qualify for the LTT rebates, a FTHB is a person:

-          who has never owned a home ANYWHERE IN THE WORLD; and

-          whose spouse has not owned a home anywhere in the world while being the spouse of the FTHB 

o   The term “spouse” means married or in a common law relationship (continuously lived together for at least 3 years – or shorter if parents of a child).

See the difference?  For LTT rebate purposes, your FTHB status will never reset.  Also, for LTT rebate purposes, you will not be considered to be a FTHB if your spouse (married or common law) owned a home while being your spouse. 

It is entirely possible for one to be considered a FTHB for the purposes of the HBP, but not a FTHB for the purposes of LTT rebates.  Buyers are urged to consult an experienced mortgage specialist and real estate lawyer, lest they be shocked by having to pay more than anticipated. 

For more information on the Home Buyers’ Plan, including spousal eligibility, you can visit theCRA website. For more information on LTT, please visit the City of Toronto City of Toronto.

This post content is sponsored by Royal Bank of Canada, however the views and opinions expressed herein represent my own and not those of Royal Bank of Canada or any other party and do not constitute financial, legal or other advice.


Calculating Land Transfer Taxes

NEW! City of Toronto Land Transfer Tax


On October 22, 2007, Toronto City Council approved a new land transfer tax which takes effect on February 1, 2008.


(a) ½ of 1% (or $5 per $1000) to $55,000, and
(b) 1% (or $10 per $1000) over $55,000 to $400,000 and
(c) 2% (or $20 per $1000) over $400,000


Use our on-line tool to help calculate land transfer tax for your purchase.


Land Transfer Tax (LTT) is a tax charged by Ontario to buyers of real estate at the time a deed is tendered for registration with the Land Titles Office. It is sometimes called the “Welcome Tax”.


LTT is calculated as a percentage of the purchase price of the property as follows:


(a) ½ of 1% (or .05% or $5 per $1000) to $55,000, and
(b) 1% (or /1% or $10 per $1000) over $55,000 to $250,000 and
(c) an additional .5% for all values over $150,000 but under $450,000


An easy rule of thumb for properties under $250,000 is to take 1% of the value of the property and substract $275 (to account for the .5% reduction in tax for the first $55,000 of value). For example, if the property is worth $100,00 the tax would be calculated as follows:
$100,00 x .01 = $1,000
less (275)
equals LTT of $725


Use our on-line tool to help calculate land transfer tax for your purchase.


There are some situations that involve different calculations, so be sure to consult with your legal advisor to get the proper calculation.