First-Time Home Buyer Incentives in Canada: Pre-Construction Guide

First-Time Home Buyer Incentives in Canada: How They Work When Buying Pre-Construction

Buying your first home in Canada can feel overwhelming—especially when prices, taxes, and closing costs add up quickly. The good news? There are several first-time home buyer incentives in Canada designed to make homeownership more affordable.

If you’re considering a pre-construction home from a builder, these incentives still apply—but they work a little differently than when buying resale. Here’s a complete, easy-to-understand guide.

Who Qualifies as a First-Time Home Buyer in Canada?

You’re generally considered a first-time home buyer if:

• You’re at least 18 years old

• You’re a Canadian citizen or permanent resident

• You did not own and live in a home in the year you purchase or in the previous four calendar years

• The home will be your primary residence

This definition is critical, as it determines eligibility for most first-time buyer incentives, including those used for pre-construction purchases.

What Is a Pre-Construction Home?

A pre-construction home is purchased directly from a builder before or during construction. This includes:

• New detached homes

• Townhomes

• Condos bought from the developer

Pre-construction homes usually involve staggered deposits, followed by final closing once construction is complete.

1. GST/HST Rebate for First-Time Buyers (Major Pre-Construction Benefit)

One of the biggest advantages of buying pre-construction as a first-time buyer is access to the GST/HST New Housing Rebate.

How the GST/HST Rebate Works

• New homes are subject to GST or HST

• Eligible first-time buyers may receive a partial rebate on the tax

• The home must be used as your principal residence

This rebate can mean thousands of dollars in savings, especially on new builds.

How Builders Apply the Rebate

• Some builders include the rebate in the purchase price

• Others require you to apply for the rebate after closing

• Your agreement of purchase and sale will outline how this is handled

?? Important: Eligibility is based on the date you take ownership, not when you sign the contract.

2. Land Transfer Tax Rebates (Provincial & Municipal)

First-time home buyers in many provinces qualify for land transfer tax rebates, even when buying pre-construction.

Ontario Example:

• Up to $4,000 provincial land transfer tax rebate

• Additional municipal rebate if applicable (e.g., Toronto)

These rebates apply as long as:

• You’re a first-time buyer

• The home is your primary residence

• You take ownership as an eligible buyer

3. First-Time Home Buyers’ Tax Credit (HBTC)

The First-Time Home Buyers’ Tax Credit is a federal incentive you can claim when filing your income taxes.

Key Details:

• Based on a $10,000 purchase amount

• Provides up to $1,500 in tax savings

• Claimed in the year you take possession of the home

This applies whether you buy resale or pre-construction.

4. FHSA: First Home Savings Account

The First Home Savings Account (FHSA) is one of the most powerful tools for first-time buyers.

FHSA Benefits:

• Contribute up to $40,000

• Contributions are tax-deductible

• Withdrawals for a first home are tax-free

For pre-construction buyers, the FHSA is ideal because you often have years between signing and closing, allowing time to grow savings.

5. Home Buyers’ Plan (HBP)

The Home Buyers’ Plan allows first-time buyers to use RRSP funds toward their purchase.

How It Works:

• Withdraw up to $35,000 per person from RRSPs

• No tax at withdrawal

• Repay over up to 15 years

This program works well alongside the FHSA for down payment planning.

Special Considerations When Buying Pre-Construction

Ownership Timing Matters

Most incentives are assessed based on closing/possession date, not contract date. If your situation changes before closing, eligibility could be affected.

Deposits vs. Incentives

• Deposits are paid during construction

• Incentives are typically applied at final closing

Builder Contracts Are Critical

Always review:

• Whether HST is included in the price

• How rebates are assigned

• Occupancy fees and closing adjustments

A real estate lawyer can help protect your incentives.

Incentives That Are No Longer Available

The Federal First-Time Home Buyer Incentive (shared-equity program) is no longer accepting new applications. Buyers should focus on tax rebates and savings programs instead.

Final Thoughts: Is Pre-Construction a Smart Move for First-Time Buyers?

For many Canadians, buying pre-construction can be a strategic way to enter the market—especially when paired with first-time home buyer incentives.

Key Benefits:

? GST/HST rebates on new builds
? Land transfer tax rebates
? Tax credits and savings programs
? Time to save before closing

With the right planning and professional guidance, first-time buyers can significantly reduce upfront costs and long-term financial stress.