Four Programs, Four Different “First-Time Buyer” Tests: FHSA, HBP, the LTT Rebate, and the GST New Housing Rebate

Same three words, four different tests: FHSA and HBP look back four years, Ontario’s refund looks back your whole life, and the GST rebate doesn’t look at first-time status at all.

I’m Arthur Zhao, a Toronto broker with 12 years full-time. Sit at enough closing tables and you start to recognize the same surprised look: a buyer who sailed through the FHSA had quietly assumed the land transfer tax refund would land automatically too — and it didn’t. Here is the root of that surprise: “first-time home buyer” is not one badge that unlocks everything. It is four separate tests, written by four different desks in government, that happen to share a name. The four are the FHSA, the Home Buyers’ Plan, Ontario’s land transfer tax refund, and the GST/HST New Housing Rebate — a savings account, an RRSP loan, a provincial tax refund, and a federal sales-tax rebate, each with its own idea of what “first-time” means. One looks back four years, one looks back your whole life, and one never asks the question at all. Line the four tests up and you can see precisely why one person clears some and fails the rest.

One label, four different rulebooks

Most buyers assume “first-time home buyer” is one official designation you either have or you don’t. It isn’t. Ottawa and Queen’s Park each built their own programs for their own reasons, and each one defines “first-time” to suit its own policy — the definitions do not carry over from one to the next.

The four that get bundled together are the FHSA (a registered savings account), the Home Buyers’ Plan (borrowing your own RRSP money for a down payment), Ontario’s land transfer tax refund (a provincial closing-cost break), and the GST/HST New Housing Rebate (a federal rebate on a new home). Two are federal savings tools, one is a provincial tax refund, one is a federal sales-tax rebate. Different goals, different tests. Watch how their answers diverge on four questions: how far back they look, whether a spouse’s history counts, whether resale homes qualify, and whether someone who already owns a home is shut out.

FHSA: the current year plus four calendar years

The FHSA uses a recent-history window, not a lifetime one. To open one and get its tax benefits you must be a qualifying first-time home buyer — meaning you did not live in a qualifying home that you (or your spouse or common-law partner at the time you open the account) owned, at any point in the part of the current calendar year before opening it, or in the four preceding calendar years (source: CRA, FHSA).

The limits: contribute up to $8,000 a year to a lifetime maximum of $40,000; contributions are deductible, and qualifying withdrawals come out tax-free.

The key is that four-year window. If you sold a home a few years ago and have rented since, once you clear four calendar years without living in a home you owned, you can become a qualifying first-time buyer again. Hold that thought — it is the opposite of how Ontario’s land transfer tax refund works.

The Home Buyers’ Plan: same four-year idea, but it’s a loan

The Home Buyers’ Plan lets you pull up to $60,000 out of your own RRSP in a lump sum (for withdrawals after April 16, 2024; the old limit was $35,000) to buy or build a first home (source: CRA; federal Budget 2024). The catch is in the name — it is a plan, not a gift: you repay it to your RRSP over about 15 years, and for withdrawals made between January 1, 2022 and December 31, 2025 the grace period before repayment begins was extended from two years to five (source: CRA).

Its first-time test mirrors the FHSA’s four-year window: neither you nor your spouse lived in a home either of you owned during the year of withdrawal or the four preceding calendar years (source: CRA, Home Buyers’ Plan). That is why the FHSA and HBP usually qualify — and get used — together; plenty of buyers stack both to build a down payment. But they are still separate doors from the two tax programs below.

Ontario’s LTT refund: never owned, anywhere, ever

This is the strictest of the four. Ontario refunds first-time buyers up to $4,000 of land transfer tax (that amount since January 1, 2017; source: Ontario Ministry of Finance). But its definition of first-time is lifetime and worldwide:

• you must be at least 18 and a Canadian citizen or permanent resident;
• you must never have owned an eligible home, anywhere in the world, at any time — a condo you owned and sold abroad a decade ago ends your eligibility permanently;
• the spouse rule: if your spouse owned an eligible home anywhere in the world while they were your spouse, neither of you can claim. But if your spouse sold every home they owned before you became spouses, you may still qualify.

You also have to occupy the home as your principal residence within 9 months of transfer, and apply within 18 months of registration (source: Ontario Ministry of Finance). In one line: FHSA and HBP reset after four years; this one is once in a lifetime, gone the moment you have ever owned.

The GST New Housing Rebate: it doesn’t ask if you’re a first-timer

Here is the counterintuitive one. The first three programs all hinge on whether you count as a first-time buyer. The GST/HST New Housing Rebate does not look at that at all.

Its federal portion returns 36% of the GST you paid on a new (or substantially renovated) home, to a maximum of about $6,300, for homes with a fair market value of $350,000 or less; it phases down between $350,000 and $450,000, and disappears entirely above $450,000 (source: CRA Guide RC4028).

What it actually tests is use, not status: the new home must be the primary place of residence of you or a relation, bought new or substantially renovated. Two results fall out of that:
• someone who already owns three homes can still claim it, as long as this new one is their primary residence;
• a genuine first-time buyer purchasing a resale home gets nothing — a used home generally carries no GST on the sale, so there is nothing to rebate.

Three status tests vs. one use test

Same buyer, four answers: three real scenarios

Put the rules on real people and the divergence is obvious:

Scenario 1: A nurse who bought and lived in a starter condo in her twenties, sold it, and has rented for the past five years. With no owned home lived in during the current year or the past four calendar years, the FHSA and HBP may be open to her again. But because she once owned, Ontario’s land transfer tax refund is gone for good.

Scenario 2: A homeowner buying a newly built condo to move into himself, keeping his old house as a rental. He already owns → FHSA, HBP, and the LTT refund are all out. But the new condo is his own primary residence → the GST New Housing Rebate is available.

Scenario 3: A recent grad buying a resale semi-detached as her first home. FHSA, HBP, and the LTT refund all apply. But a resale home carries no GST → the New Housing Rebate gives her nothing.

The label “first-time buyer” on its own tells you almost nothing about which breaks you will actually get.

One more wrinkle: the 2025 first-time buyers’ GST rebate

Just as you have learned that the GST rebate ignores first-time status, Ottawa added a new GST rebate built specifically for first-time buyers — which makes the picture busier, not simpler. This new rebate (enacted in Bill C-4, which received Royal Assent on March 12, 2026) removes the full GST for eligible first-time buyers on a new home valued up to $1,000,000, phases out between $1,000,000 and $1,500,000, tops out at $50,000, and gives nothing above $1,500,000 (source: Department of Finance / Bill C-4; PwC and KPMG analyses).

The point to hold onto: this is a different animal from the older New Housing Rebate in the previous section — the old one ignores status, the new one is built entirely around first-time status, and it uses yet another version of the test (much like the FHSA: you did not live in a home you or your spouse owned in the current year or the four preceding calendar years). Eligibility also requires the agreement of purchase and sale to be signed on or after May 27, 2025 and before 2031 (source: Bill C-4, per KPMG / Fasken; note: secondary sources disagreed on this exact date, so confirm your specific agreement with CRA or a tax professional).

In short: under the single word “GST” there are now two tests pointing in opposite directions.

Arthur Zhao

Real Estate Broker · FRI · ABR · SRS · PSA · MCNE · E-PRO · CLHMS & GUILD Elite · REAIS

VP & Branch Manager, Bay Street Group Inc.

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