The Ontario Provincial Government gives a credit of a maximum of $4,000 to first time home buyers, who are Canadian citizens or permanent residents of Canada, purchasing an eligible residential property in Ontario. The credit is available whether you are purchasing a new or used eligible residential dwelling.
In order to qualify for the one-time credit you and your spouse need to be first time homebuyers. You are considered a first time homebuyer if you have never owned a property anywhere in the world. This includes any property that may have been transferred into your name in another country, even if that property was sold prior to this acquisition.
The Land Transfer Tax Act deems that you are not a first time homebuyer if your spouse is not a first time home buyer. You are not eligible for the first time home buyer credit if your spouse has owned a home in the past and did not sell the home prior to becoming your spouse. For land transfer tax purposes, spouses are (1) a married couple (2) a common-law couple who have been cohabitating for three years or more or (3) a common-law couple who are cohabitating and have a child together. The $4,000 credit is shared between purchasers if they are both first time home buyers. As an example, if you purchase a home individually and your are a first time home buyer, you will receive a credit of a maximum of $4,000 towards the land transfer tax. The credit is the same amount when you purchase a home with another first time home buyer. In other words, the credit is not doubled. If the land transfer tax is less than $4,000, your credit will be for the amount of the land transfer tax only.
Another exception to the credit is the manner in which the property will be used. To qualify for the land transfer tax credit, you need to occupy the home within nine months of the closing date. If you are purchasing the home for investment purposes, you do not qualify for the land transfer tax credit.
Additionally, if you are purchasing the property with a spouse or other who is not a first time homebuyer, your credit is reduced based on your percentage of ownership. If you take title to the property as a joint tenant, your credit will be reduced to $2,000 as joint tenants are deemed to own property on a 50/50 basis. If you are purchasing the home as a tenant-in-common, the amount of your credit will vary depending on your share of ownership as tenants-in-common are not deemed to be 50/50 owners and can own the property in whichever percentage is set-out in the deed/transfer.
Once you have purchased a property, you are no longer eligible for the land transfer tax credit irrespective of the number of years that have elapsed since your first purchase and irrespective of whether you received the credit or not. In the past, another qualification for the first time home buyer credit was that the property needed to be a new property purchased from a builder.
If you have questions about whether or not you and/or your spouse qualify as first time home buyers, or require assistance with other residential real estate matters, please get in touch with us.