What can a first-time home buyer in BC get off taxes, and how can I save for it?

Question

Accepted Answer

No property transfer tax on the first $500,000 up to an $835,000 price, a federal tax credit, the GST rebate on a new home, and an FHSA and RRSP withdrawals toward the down payment. Each program defines a first-time buyer its own way. BC's transfer tax exemption is for someone who has never owned a home they lived in, anywhere. The federal savings plans and tax credit only look back four years, so someone who sold a home some years ago can qualify for them and not for BC's exemption. Look up the address or PID on PlaceDossier to see the record for that lot. BC's first time home buyers' exemption: No property transfer tax on the first $500,000 of the price, so up to $8,000 off (Property Transfer Tax Act ss. 5 (1), (1.01)). It's for a Canadian citizen or permanent resident who has lived in BC for the year before registration, or filed 2 BC income tax returns in the last 6 years, has never held a registered interest in land that was their principal residence anywhere, and has never had the exemption or its refund (s. 4 (1)). It applies in full up to a fair market value of $835,000 and shrinks to nothing at $860,000 (ss. 4 (1), 5 (1.1)). Where only some buyers qualify, only their share of the property is exempt (the Province's first time home buyers' page). Keeping it: The buyer must move in within 92 days of registration and live there as their principal residence until the first anniversary (s. 8 (2) (a)). Moving out early means paying the tax back, in part if it's late in the year (s. 9 (2.1)); a death, or a transfer under a separation agreement or Family Law Act order, keeps it (s. 10). A buyer who didn't claim it at registration can apply for a refund within 18 months (s. 7 (1)). Claiming it falsely costs a penalty equal to the exemption, on top of it (the Province's page). The newly built home exemption: A Canadian citizen or permanent resident buying a newly built home that has never been lived in, at the first registration since it was finished, pays no general tax up to $1,100,000, shrinking to nothing at $1,150,000 (ss. 12.01 (1), 12.02). It needn't be a first home: it's open to anyone who will live there, moving in within 92 days and staying the first year (s. 12.05). The Province counts a manufactured home placed and fixed on vacant land, and a house moved onto vacant land, if no one has lived in it there (its newly built home page). Only one of the two exemptions can be claimed on a purchase (s. 12.10); a first-time buyer of a new home can switch to this one within 18 months (s. 12.11). Bare land and acreages under BC's exemptions: On a lot over 0.5 ha, either exemption covers only the home and the share of the land that 0.5 ha is of the whole; on a smaller lot with other buildings, only the home and the land (ss. 6, 12.03). A first-time buyer of bare land keeps the exemption only by building a home and moving in before the first anniversary, with the land's value at registration plus the building costs within $860,000 (s. 8 (2) (b)); the Province's page uses $835,000, the line for the full exemption. Bare land bought under the newly built home rules pays the tax at registration, then claims a refund after the first anniversary and within 18 months, once a home is built and lived in and the land's value plus its cost is within $1,150,000 (s. 12.06); the Province's page uses $1,100,000, the line for the full exemption. A year is short to build a house on rural land (our reading). First Home Savings Account: A resident of Canada, 18 or over, who hasn't lived in a home owned by them or their current spouse or common-law partner in this calendar year or the four before, can open one (Income Tax Act s. 146.6 (1)). Contributions are deductible up to $8,000 a year and $40,000 in all, with up to $8,000 of unused room carried to the next year (s. 146.6 (1), (5)). A qualifying withdrawal for a first home isn't taxed (s. 146.6 (6) (a)). The account ends at the close of the year after the earliest of its 14th anniversary, the holder turning 70 or the first qualifying withdrawal, so it can stay open about 15 years (s. 146.6 (1), (16)); what's left can go to an RRSP or RRIF (s. 146.6 (7), (8)). The Home Buyers' Plan: A first-time buyer, by the same four-year look-back, can take up to $60,000 out of their RRSPs without tax toward a home they'll live in within a year of buying it, with a written agreement to buy or build it before the withdrawal (s. 146.01 (1)). It's paid back to the RRSPs over 15 years, starting the second year after the withdrawal; a year's share not repaid is added to income (s. 146.01 (4)). For first withdrawals from 2022 to 2028 the Act puts the start back to the fifth year after (s. 146.01 (4.1), (4.2)); the CRA's Home Buyers' Plan pages describe this relief in different years, so confirm the dates for yours. The first-time home buyers' tax credit: In the year a buyer registers a qualifying home they or their spouse acquired, they can deduct $10,000 times the lowest federal rate from their tax: 14% from 2026, so $1,400 (ss. 118.05 (2), (3), 117 (2) (a), 248 (1)). It uses the same four-year look-back and a home they intend to live in within a year; buyers of one home share one credit (s. 118.05 (1), (4)). Building on rural land with the federal plans: The FHSA and the Home Buyers' Plan both count a written agreement to build a home, as well as to buy one (ss. 146.6 (1), 146.01 (1)). Under the Home Buyers' Plan, a home not finished in time counts as acquired when construction payments to people at arm's length match the withdrawals by October 1 of the year after (s. 146.01 (2) (c)). The tax credit needs a housing unit acquired and registered (ss. 118.05 (1), (2), 146.01 (1)), so it's unclear whether bare land bought to build on counts. GST, the grant and the down payment: A first-time buyer of a new or substantially renovated home can get back all the GST on a price up to $1 million, and part of it up to $1.5 million (see GST on a home or lot). The home owner grant comes off the yearly tax once you live there (see the home owner grant). With under 20% down the mortgage is insured, and CMHC's insured loans need a home lived in year-round with year-round access (see a mortgage on rural land). What it means for a buyer: The transfer tax exemption is claimed on the return your lawyer or notary files at registration, so settle which one applies before completion. On an acreage or bare land the saving is smaller, or comes later, than on a town lot. A report gives the lot's area, whether it's in the ALR, and the property tax rate where it is.

What can a first-time home buyer in BC get off taxes, and how can I save for it?

What the answer means

Before you buy: who to ask