Land Transfer Tax Refund for First Time Homebuyers

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Land Transfer Tax Refund for First Time Homebuyers

First-time homebuyers in Ontario may be eligible for a refund on all or part of the land transfer tax they pay when they purchase a home up to a maximum of $4,000.

You won’t qualify for a refund if you’ve owned a home or had an interest in a home anywhere in the world. Your spouse also won’t qualify if they’ve owned or had an interest in a home anywhere in the world while they were your spouse. It doesn’t matter how you acquired the house(gift, purchase, or inheritance). If you’ve owned a house you won’t qualify.

You will receive a reduced refund if one or more of the buyers is not a first-time buyer, and the amount you receive will depend on the interest acquired by those who do qualify for the refund.

Example – Parent and Child

If you are buying a property 50/50 with your parent or child, and the child is a first-time homebuyer but the parent has owned a home before, the child can claim a refund of 50% on the land transfer tax.

Example ‑ Spouse

A qualifying purchaser may also claim a refund in proportion to his or her spouse’s interest if that purchaser’s spouse has owned a home before becoming the purchaser’s spouse, but not while being that purchaser’s spouse.

The ability of a purchaser to include his or her spouse’s interest in determining the maximum refund is restricted if the spouse is not a Canadian citizen or a permanent resident of Canada on the date of the conveyance or disposition.

If you are not spouses, then your partner may claim a refund based on his interest acquired in the home. If you are spouses, and both of you are Canadian citizens or permanent residents of Canada, your partner may claim a refund up to the maximum refund amount applicable to your transaction (you can claim the refund for your interest and your partner’s interest), as long as you did not own a home while you were each other’s spouse. If you did own the home while you were spouses of each other, then your partner does not qualify for a refund even if you did not live in the house together.

Requirements to qualify for the refund

To qualify for a refund:

  • The purchaser must be at least 18 years old.
  • The purchaser must occupy the home as their principal residence within nine months of the date of transfer.
  • The purchaser cannot have ever owned an eligible home, or an interest in an eligible home, anywhere in the world, at any time.
  • If the purchaser entered into an agreement of purchase and sale before December 14, 2007, the home must be a newly constructed home and the purchaser must be eligible for the Tarion New Home Warranty.
  • 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.

Additional requirement

Beginning January 1, 2017, eligibility for the first‑time homebuyers refund program is restricted to Canadian citizens and permanent residents of Canada.

Time limit to apply for a refund

A qualifying purchaser must apply for the refund within 18 months after the date of registration of the conveyance or the date the unregistered disposition occurs.

Definitions

“eligible home” means,

  1. a detached house;
  2. a semi‑detached house, including a dwelling house that is joined to another dwelling house at the footing or foundation by a wall above or below grade or both above and below grade;
  3. a townhouse;
  4. a share or shares of the capital stock of a co‑operative corporation if the share or shares are acquired for the purpose of acquiring the right to in‑habit a housing unit owned by the corporation;
  5. a mobile home that complies with the Canadian Standards Association Standard CAN/CSA‑Z240 Mobile Homes and is suitable for year-round permanent residential occupation;
  6. a condominium unit;
  7. a residential dwelling that is a duplex, triplex or fourplex;
  8. a partial ownership interest as a tenant in common of real property if the ownership interest was acquired for the purpose of acquiring the right to inhabit a housing unit forming part of the real property;
  9. a manufactured home that is manufactured in whole or in part at an offsite location, that is intended for basement installation, that is suitable for year-round permanent residential occupation and that complies with,
    1. the Building Code made under the Building Code Act, 1992;
    2. if the manufactured home is constructed in sections that are not wider than 4.3 metres, Canadian Standards Association Standard Z240.2.1 Structural Requirements for Mobile Homes and Canadian Standards Association Standard Z240.8.1 Windows for Use in Mobile Homes; or
    3. if the manufactured home is constructed in sections that are 4.3 metres or wider, Canadian Standards Association Standard A277 Procedure for Certification of Factory Built Houses, or
  10. any other residential property as may be prescribed.

“newly constructed home” means a home in respect of which the purchaser is entitled to a warranty under section 13 of the Ontario New Home Warranties Plan Act (ONHWPA) and which is sold to the purchaser by a vendor as defined in ONHWPA.

permanent resident of Canada” means a permanent resident as defined in the Immigration and Refugee Protection Act (Canada);

“purchaser” means,

  1. if the conveyance or disposition of the qualifying home occurs before January 1, 2017, an individual who is at least 18 years of age and who has never owned an eligible home anywhere in the world and whose spouse has not owned an eligible home anywhere in the world while he or she was a spouse of the individual,
  2. if the conveyance or disposition of the qualifying home occurs on or after January 1, 2017 and the agreement of purchase and sale for the home was entered into on or before November 14, 2016, an individual who is at least 18 years of age and who has never owned an eligible home anywhere in the world and whose spouse has not owned an eligible home anywhere in the world while he or she was a spouse of the individual, and
  3. if the conveyance or disposition of the qualifying home occurs on or after January 1, 2017 and the agreement of purchase and sale for the home was entered into after November 14, 2016, an individual who is at least 18 years of age, who is a Canadian citizen or permanent resident of Canada, and who has never owned an eligible home anywhere in the world and whose spouse has not owned an eligible home anywhere in the world while he or she was a spouse of the individual.

“qualifying home” means,

  1. for agreements of purchase and sale entered before December 14, 2007, a newly constructed home, and
  2. for agreements of purchase and sale entered after December 13, 2007, an eligible home.

“spouse” means spouse as defined in section 29 of the Family Law Act.  At present, “spouse” means either of two persons who, (a) are married to each other, or (b) have together entered into a marriage that is voidable or void, in good faith on the part of a person relying on this clause to assert any right, and in addition includes either of two persons who are not married to each other and have cohabited,

  1. continuously for a period of not less than three years, or
  2. in a relationship of some permanence, if they are the natural or adoptive parents of a child.

Questions about the Land Transfer Tax Refund for First Time Homebuyers or want help buying a home in Hamilton?

Fill out the contact form or call 289-389-2323.