6 Tax Breaks Every Canadian Homebuyer Should Know in 2025

Buying a home is likely the largest purchase you'll ever make, and every dollar counts. The good news? The Canadian government offers several tax incentives designed to help you get there faster and keep more money in your pocket. Here's your comprehensive guide to the tax breaks available to Canadian homebuyers and homeowners.

1. Home Buyers' Plan (HBP)

What It Is: The Home Buyers' Plan allows first-time buyers to withdraw up to $60,000 tax-free from their Registered Retirement Savings Plan (RRSP) to purchase or build a qualifying home.

Key Details: - Couples can each withdraw $60,000, for a combined $120,000 - You have 15 years to repay the amount to your RRSP - Repayments are divided equally over the 15-year period - Missing a repayment means that amount becomes taxable income

Pro Tip: If you've been contributing to your RRSP specifically for a home purchase, ensure your contributions have been in the account for at least 90 days before withdrawal.

2. First Home Savings Account (FHSA)

What It Is: The FHSA is a relatively new registered savings plan that combines the best features of an RRSP and a Tax-Free Savings Account (TFSA).

Key Details: - Contribute up to $8,000 per year - Lifetime contribution limit of $40,000 - Contributions are tax-deductible (like an RRSP) - Withdrawals for a qualifying home purchase are tax-free (like a TFSA) - Unused contribution room can be carried forward (up to $8,000)

Pro Tip: The FHSA can be used alongside the Home Buyers' Plan, potentially giving you access to $100,000+ in tax-advantaged funds for your down payment.

3. Home Buyers' Amount (HBA)

What It Is: A non-refundable tax credit for first-time homebuyers that provides up to $1,500 in tax relief.

Key Details: - Based on a $10,000 credit amount at the lowest federal tax rate (15%) - Claimed when you file your income tax return for the year you purchased - Can be split between spouses or common-law partners - Applies to qualifying homes including single-family houses, condos, and townhouses

Pro Tip: Don't forget to claim this credit—it's essentially free money that many first-time buyers overlook.

4. Home Accessibility Tax Credit (HATC)

What It Is: A tax credit designed to help seniors and people with disabilities make their homes more accessible and safer.

Key Details: - Claim up to $20,000 in eligible renovation expenses - Maximum tax credit of $3,000 (15% of eligible expenses) - Eligible renovations include wheelchair ramps, walk-in bathtubs, grab bars, and more - Available to qualifying individuals or family members who support them

Pro Tip: Keep detailed receipts and documentation for all accessibility renovations. Eligible expenses include labour and professional services, building materials, and permits.

5. Multigenerational Home Renovation Tax Credit (MHRTC)

What It Is: A refundable tax credit for renovations that create a secondary unit for a senior or an adult with a disability.

Key Details: - Claim up to $50,000 in eligible expenses - Maximum refundable credit of $7,500 (15% of expenses) - The secondary unit must have a private entrance, kitchen, and bathroom - The qualifying individual must be a senior (65+) or eligible for the disability tax credit

Pro Tip: This credit supports multigenerational living arrangements, which are becoming increasingly popular for both financial and family reasons.

6. GST/HST New Housing Rebate

What It Is: A rebate on a portion of the GST or HST paid on a newly constructed or substantially renovated home.

Key Details: - Available for new homes valued under $450,000 (for maximum rebate) - Partial rebates available for homes between $350,000 and $450,000 - Can apply to primary residences or homes purchased to rent out - Builder-assigned rebates may already be factored into your purchase price

Pro Tip: If you're buying a new build, clarify with your builder whether the rebate has been assigned to them or if you'll need to apply directly.

Making the Most of These Incentives

Understanding these tax breaks is the first step—implementing them strategically is where the real savings happen. Consider working with a tax professional and a knowledgeable real estate team to ensure you're maximizing every available benefit.

Ready to put these tax advantages to work on your home purchase? Connect with Nickey at Calford & Co. to discuss your homebuying goals and create a strategy that makes the most of your investment.