Government programs

RRSP Home Buyers' Plan

The Home Buyers' Plan (HBP) is a program under which you can, generally, withdraw up to $20,000 from your retirement savings plan (RRSPs) to buy or build a qualifying home. Withdrawals that meet all applicable HBP conditions do not have to be included in your income, and your RRSP issuer will not withhold tax on these amounts. However, before you can withdraw funds you must have entered into a written agreement to buy or build a qualifying home which you must occupy no later than one year after buying or building the home.

If you buy the qualifying home together with your spouse or other individuals, each of you can withdraw up to $20,000. You cannot withdraw an amount from your RRSP under the HBP if you or your spouse owned the home more than 30 days before the date of your withdrawal.

Up to $20,000 per person could be withdrawn tax-free from RRSPs to buy or build a principal residence. Couples -- including common-law -- will be able to withdraw up to $40,000.

You have to meet the first-time buyer's condition. You are not considered a first-time home buyer if you or your spouse owned a home that you occupied as your principal place of residence in the past 5 years. To determine past 5 years, the 4 years preceding the year you make your withdrawal plus the period in the year you make your withdrawal ending 31 days before your withdrawal is the rule adopted.

Home buyers withdrawing funds do not have to pay income tax on the amount withdrawn, as long as the funds are repaid into an RRSP in the future.

The 15-year repayment period will begin in the second calendar year following the calendar year in which the withdrawal is made. In addition, a qualifying home must generally be acquired before October 1 of the calendar year following the year of withdrawal. For example, those making withdrawals under the plan in 2000 will have until October 1, 2001 to acquire a qualifying home and their first annual repayment will be due by the end of 2002 or the first two months of 2003.

A special rule denies a tax deduction for contributions to an RRSP that are withdrawn within 90 days of the RRSP deposit being made. Consequently, to get the normal tax break for a contribution and to use those funds under the plan, the money must be in your RRSP for at least 90 days before a withdrawal is made.

You can participate in the HBP more than once if:

  • your HBP balance for your previous participation is zero on January 1 of the year you want your new participation in the HBP to occur; and
  • you meet the first-time buyer's condition and all other HBP conditions that apply to your situation.
  • Existing homeowners can use the HBP to purchase a more accessible home or a home for a disabled dependent relative where the individual withdrawing the funds:
  • qualifies for the disability tax credit (DTC) and is buying a home that is more accessible for the individual or is better suited for the care of the individual;
  • is related to a disabled individual who qualifies for the DTC and is buying a home for the benefit of the disabled individual that is more accessible for, or better suited for, the care of the disabled individual, or;
  • is related to a disabled individual who qualifies for the DTC and is withdrawing an amount for the disabled individual to buy a home that is more accessible for, or better suited for, the care of the disabled individual.

For more information call 1-800-959-8281.

CMHC Purchase Plus Improvements
Canada Mortgage and Housing Corporation (CMHC) insured mortgage loans are available to cover the purchase price of a home as well as an amount to pay for immediate major renovations or other improvements that the purchaser may wish to make to the property. This option eliminates the need to obtain secondary financing after the purchase to pay for improvements. The homebuyer obtains a single first mortgage, makes a single mortgage payment, and benefits from first mortgage interest rates.

The insured loan will be based on the lower of:

  • The purchase price plus the actual cost of improvements, or,
  • The "as improved" market value. Prior to approval, CMHC will determine the market value of the property after renovations/improvements. The lending value will not exceed the market value of the property after renovations/improvements.

Applicants must have the following:

  • A minimum of 5% down payment of total cost (purchase price plus renovations/improvements)
  • Cost estimates for renovations/improvements
  • Qualifications to obtain a CMHC-insured loan through an approved lender.


Purchase Price


Renovations/improvements costs


Total cost



Lending Value


Maximum Mortgage (95%)


Mimimum 5% down payment


* Where the loan-to-value ratio is greater than 90%, the maximum house price including the cost of improvements is $250,000 in Toronto.

For more information, call CMHC at (416) 221-2642.

Five Per Cent Down Payment Program

With as little as five per cent of the purchase price, all home buyers now have access to mortgage insurance enabling then to enter the housing market, as long as you can manage the costs of home ownership.


  • Mortgage insurance for 95 per cent mortgages is now available to both first time and repeat home buyers.
  • Buyers using the Program may consume up to 32 per cent of their gross family income for payments of principle, interest, property taxes and heating, and total debt load cannot exceed 40 per cent of family income.
  • Insurance premiums on loans above 90 per cent of the lending value of the house will be 3.75 per cent of the mortgage loan. This premium can be added to the mortgage.
  • Price restrictions include a $300,000 ceiling on homes purchased in the Greater Toronto Area.
  • The maximum amortization period is 25 years.
  • Borrowers are required to demonstrate, at the time of application, their ability to cover closing costs equal to at least 1.5% of the purchase price.
  • Where the minimum equity requirement is being met by way of a financial gift, the funds must be in possession of the borrower 15 days before making an offer to purchase.

For more information call CMHC at 416-221-2642.

GST New Housing Rebate Program

You may be eligible to claim a rebate for a part of the GST you pay on the purchase price or cost of building your home if:

  • you buy a new or substantially renovated home (including the land or if you lease the land) from a builder;
  • you buy a new mobile home (including a modular home) or a floating home from a builder or vendor;
  • you buy a share of capital stock of a co-operative housing corporation;
  • you construct or substantially renovate your own home, or carry out a major addition (or hire another person to do so); or
  • your home is destroyed in a fire and is subsequently rebuilt.


  • Resale homes are exempt from the 7% GST.
  • New homes are subject to the 7% GST. New home buyers can apply for a 2.52 % rebate of the 7% GST applicable to the purchase price to a maximum of $8,750 for homes costing less than $350,000 before GST.
  • For new homes priced between $350,000 and $450,000 before GST, the GST rebate would be reduced proportionately.
  • New homes priced $450,000 before GST or higher would not receive a rebate.
  • NOTE: In the Greater Toronto Area, most builders include the GST in the price of the house, and any rebate would be assignable to the builder as they would be absorbing the net GST cost.

For additional questions on the GST rebate program, call Revenue Canada's toll-free-enquiry service at 1-800-565-9353 or contact your Revenue Canada tax services office listed in the blue pages of your telephone book.


Land Transfer Tax (LTT) Rebate Program

First-time home buyers who purchase a newly constructed home will receive a rebate of the Land Transfer Tax (LTT). All other buyers will continue to pay the full applicable tax. The maximum LTT rebate is $2,000.

The 1996 Ontario Budget announced a special one-year provision to the LTT that was renewed every year and is now a permanent program.

FIRST-TIME BUYERS who purchase a NEWLY CONSTRUCTED HOME will receive a rebate of the LTT. All other buyers will continue to pay the full applicable tax.

  • The maximum rebate is $2000. If an individual owns less than 100% interest in the newly-built home, the amount of the rebate would be reduced and calculated according to the amount of interest in the home.
  • A rebate of $2,000 is equivalent to the LTT payable on a purchase price of $227,500 (net of GST).
  • Only individuals who are at least 18 years of age, have not (or spouse) previously owned an interest in a home anywhere qualify for the rebate.
  • Individuals who have received an Ontario Home Ownership Savings Plan (OHOSP) based refund of the LTT do not qualify.

A real estate transfer tax is assessed on real property when ownership of the property is transferred from one party to another. The tax is a percentage of the value of the property based on a graduated scale:

  • 0.5% on amounts up to and including $55,000;
  • +1.0% on the amount exceeding $55,000 up to and including $250,000;
  • +1.5% on amounts above $250,000 up to and including $400,000 for residential / +1.5% on the amount in excess of $250,000 for business properties;
  • +2.0% of the amount in excess of $400,000. [residential only]

These four portions added up together total the LTT payable.
A simple formula is as follows:

**Purchase Price

Calculation of LTT

$0 to $55,000

.005 x purchase price

$55,001 to $250,000

(.01 x purchase price) minus 275

$250,001 to $400,000 (residential)
$250,001 plus (business)

(.015 x purchase price) minus 1525

$400,001 plus (residential only)

(.02 x purchase price) minus 3525

** If the purchase price falls within this range, then apply the appropriate formula to the purchase price. For example on a $200,000 property, the LTT calculation would be [(.01 x $200,000) minus 275 = $1725].

For more information call the Ontario Finance Ministry at 1-800-263-7965.

Provincial Government Sets 2006 Rent Increase Guideline

August 2005 - The Ministry of Municipal Affairs and Housing has released the province's rent increase guideline for 2006. The 2006 guideline will be 2.1 per cent. For previous years' increase guidelines, please see the table below.

The new rent increase guideline becomes effective January 1, 2006 and establishes the maximum amount that a landlord can increase a tenant's rent without making an application to the Ontario Rental Housing Tribunal.

This guideline does not apply when renting a vacant unit. Under the Tenant Protection Act, 1997, when a unit becomes vacant, a landlord is free to charge whatever rent he/she chooses. Once the unit is rented, however, the guideline increase applies for subsequent increases to that tenant.

In the past, the rent increase guideline included a base increase of two per cent, plus an amount for increases to landlord operating costs. In 2005, the provincial government announced that the increase guideline would include only an amount for operating cost increases, while proposals to reform rent control are considered. This has been continued for 2006.

The guideline applies to most private residential rental accomodation covered by the Tenant Protection Act, 1997. The guideline does not apply to residential dwellings first occupied (by any owner or tenant) on or after November 1, 1991.

For more information on rent increases, please contact the Ontario Rental Housing Tribunal at 416-645-8080 or 1-888-332-3234.