This question was much less confusing when I was a financial advisor at one of the big banks; however, as a real estate lawyer, I am explaining the first time home buyer (FTHB) rules to clients on a daily basis. You see, the confusion lies in distinguishing between qualifying for the RRSP Home Buyer’s Plan versus qualifying for the Land Transfer Tax Rebate (provincial and municipal – if applicable).
In most cases, clients contact me after meeting with their lender or mortgage broker and they have usually been advised of the following qualifying rules about the RRSP Home Buyer’s Plan:
- Category 1: If you have NEVER owned a home anywhere in Canada that you occupied as your principal place of residence, then it’s easy – you qualify as a FTHB.
- Category 2: If you have not directly, or indirectly, owned a home within the last 5 years – bingo, you also qualify as a FTHB.
In both of the above situations, you qualify for the RRSP Home Buyer’s Plan (there are additional rules relating to your specific fact situation that you should speak to your lender about). However, as a real estate lawyer, I am more interested in whether you qualify for the Land Transfer Tax Rebate and the rules are different. Simply put, to qualify for the rebate, a first time home buyer is a person:
- 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. Spouse means:
- Either of two people who are married to each other, and also includes
- Either of two people who have continuously lived together for a period of more than 3 years, or for a shorter period of time if they are the natural or adoptive parents of a child.
So, the rules are different. This also clarifies that both spouses who live together in a home only owned by one of them are disqualified from receiving the rebate regardless of who goes on title when purchasing a new home.
Keep these differences in mind when answering your lawyer’s question about whether or not you are a first time home buyer.