Buying your first home can feel like a milestone that’s been years in the making. What surprises many people is that you don’t always have to be buying your very first property to qualify as a first-time home buyer.
Several federal programs use a broader definition, which means some people who owned a home in the past may still qualify for valuable incentives. Understanding the rules before you start shopping could save you thousands of dollars.
It’s Not Always Your First Home
Many people assume that once you’ve owned a home, you’re no longer considered a first-time buyer. That’s not necessarily true.
For many federal programs, the key question isn’t whether you’ve ever owned a home. Instead, it’s whether you’ve lived in a home that you owned as your principal residence during the current calendar year or the previous four calendar years. If you haven’t, you may qualify again as a first-time home buyer.
This often applies to people who sold a home several years ago and have been renting since.
The Four-Year Rule
The four-year rule is the foundation of most federal first-time home buyer programs. Generally, you may qualify if you have not lived in a home that you owned, or jointly owned, as your principal residence during the current calendar year or the previous four calendar years. The same rule can also take into account a home owned by your current spouse or common-law partner.
Since eligibility depends on your individual circumstances, it’s a good idea to confirm the rules before ruling yourself out.
Your Spouse or Partner Can Affect Eligibility
Even if you’ve never owned a home yourself, your current spouse or common-law partner’s ownership history may matter. For some federal programs, if your spouse or partner owned and lived in a home during the qualifying period, it could affect whether you’re considered a first-time buyer.
Homes Outside Canada Can Count
Another common misconception is that only Canadian real estate matters. In many cases, a home you owned and lived in outside Canada can also affect your eligibility if it would otherwise meet the definition of a qualifying home.
What Types of Homes Qualify?
The rules aren’t limited to detached houses.
Qualifying homes can include:
- Single-family homes
- Semi-detached homes
- Townhouses
- Condominiums
- Mobile homes
- Apartments in duplexes, triplexes, fourplexes, or apartment buildings
- Some co-operative housing units that provide an ownership interest
Programs That May Be Available
Qualifying as a first-time home buyer may open the door to several federal programs designed to make homeownership more affordable.
First Home Savings Account (FHSA)
The FHSA combines some of the tax advantages of an RRSP and a TFSA. Contributions are tax-deductible, and eligible withdrawals used to buy a qualifying home are tax-free.
Home Buyers’ Plan (HBP)
Eligible buyers may be able to withdraw funds from their RRSP through the Home Buyers’ Plan to help with the purchase or construction of a qualifying home. The withdrawn amount is repaid gradually over a set repayment period.
Home Buyers’ Amount
Eligible buyers may also be able to claim the federal Home Buyers’ Amount, which provides a non-refundable tax credit when filing their income tax return.
GST/HST Rebate on New Homes
Eligible buyers purchasing a newly built home may qualify for the federal First-Time Home Buyers’ GST/HST Rebate. Depending on the province, additional rebate programs may also be available.
Every Program Has Its Own Rules
While many federal programs use a similar definition of a first-time home buyer, not every incentive follows exactly the same criteria.
Some provincial programs and land transfer tax rebates have different eligibility requirements. It’s possible to qualify for one program but not another, so it’s important to review each program individually before making plans.
Before You Rule Yourself Out
If you’ve owned a home before, don’t assume you’ve missed your opportunity to benefit from first-time buyer programs. Depending on how long it’s been since you lived in an owned home, you could still qualify for valuable savings.
Before you start house hunting, speak with your REALTOR®, mortgage professional, or financial advisor. They can help you determine which programs you may be eligible for and explain how they fit into your home-buying plans.