Who Is Considered a First-Time Home Buyer?

In Canada, there are a few benefits for first-time home buyers. This is great news for some people, as high real estate prices can make it challenging to crack today’s market. Now, let’s talk about who is considered a first-time home buyer in Ontario.

You would think this would be a simple question. Then again, this is our government we are talking about. When they get involved with something as intricate as real estate, nothing is simple, not even who qualifies as a first-time home buyer. That’s why, in this post, we’ll dive into what the rules really mean for you when you’re ready to take this step.

Peterborough and the Kawarthas are both fantastic locations when searching for your first house! Download our detailed buying checklist to help you stay on track.

First-Time Home Buyer: The Simple Definition

Officially, being a first-time home buyer simply means that you have never purchased real estate before. Perhaps you’re still quite young and are about to leave the nest. You may have rented for years before finally deciding it’s time to put down roots. Or perhaps you are separating from a partner but your name has never been on the title.

For whatever reason, you’re finally ready to take this big step. You are very clearly a first-time home buyer if you’ve never owned a home or an interest in a home anywhere in the world.

But what if you have bought a house, but not for a long time, or under an entirely different set of circumstances that have since changed? Do the qualifiers of who is considered a first-time home buyer reset? Depending on your situation, it can, which might mean you qualify for some government programs to help you get into (or back into) the market.

Before beginning your search, it will help to have some background information. The posts below will give you insight into Peterborough real estate:

FTHB Meaning and Exceptions

The FTHB (first-time home buyer) definition by the federal government means you haven’t lived in a qualifying home as your primary residence that you owned or jointly-owned for four years or more. If you owned a house years ago, sold it, and have rented ever since, you might actually qualify for programs designed for first-time buyers.

This could also be true if you once owned a home with a former spouse and have been separated for several years.

Ontario FTHB Guidelines

The provincial rules about who qualifies as a first-time home buyer are a little more stringent. In this case, you only qualify if you have never owned or partially owned a property anywhere in the world.

There are no do-overs provincially, not even after four years of not living in a home you co-owned. Though Ontario’s definition has less wiggle room, it is also more straightforward. If you owned a home, anywhere or at any time, you are not considered a first-time home buyer.

First Time Home Buyer Advantages

First-time home buyers in Ontario can take advantage of a few programs that make getting into the market a little more accessible. For example:

The Province of Ontario offers tax benefits for first time home buyers in the form of an instant rebate of up to $4,000 off your land transfer taxes. Since this is likely your most substantial closing cost and you can’t include it in your mortgage, the rebate can be a big relief.
The First Home Savings Account is a federal program that lets you open an investment fund dedicated solely for the purpose of buying a house. You can contribute up to $8,000 each year to a maximum of $40,000.
The government of Canada also offers the Home Buyer’s Plan. Under this program, you can pull a maximum of $60,000 from an existing RRSP to buy your first house. However, you do need to repay these funds within 15 years to ensure your withdrawal remains tax free.

Can You Be a First-Time Home Buyer if Your Spouse Is Not?

Adding another name to the title can complicate the definition of first-time home buyer slightly. In most cases, you can still benefit from these government programs, just to a lesser degree than if you were both first-time buyers.

Again, Ontario is more stringent. You can only claim the provincial land transfer tax rebate as long as neither of you owned a home while you were each other’s spouse.

If your partner owned a home and sold it before you got married, you would be able to claim the rebate on your portion of the purchase. If your partner owned a home while you were spouses, neither of you could qualify for the land transfer tax rebate.

The reason is that the Ministry of Finance views a married or common-law couple as a single unit. If your partner owns a home while you are married, you have an equal right to possession of the home even if your name is not officially on the title.

When buying with a spouse who has owned property before, you can still use the First Home Savings Account and the Home Buyer Plan. If you’re both first-time buyers, you can double the benefits. For example, each of you could take $60,000 from your RRSP accounts for a total of $120,000.

The partner who is a first-time buyer can still benefit from the First-Time Home Buyer Tax Credit. This lets you claim $10,000 off your return in the calendar year that you make your purchase. This results in a reduction of up to $1,500, which may mean a refund is heading your way.

You could use these funds to cover some of your moving costs – or to treat yourself to a housewarming gift. After achieving such a milestone, you deserve a celebration!

Are you ready to begin the hunt for your first home? Our Peterborough real estate agents are committed to helping you every step of the way. Reach out to team@jeffandkatie.ca or call 705-243-9797 to learn more about our services.