Can I Qualify as a First-Time Homebuyer if I Owned Property Before?

Emma and Ryan recently got engaged and are eager to buy their first home together.

While Emma has never owned property, Ryan sold his downtown condo a year ago before they met. As they start house hunting, they wonder if they can access first-time homebuyer benefits as a couple.

"I owned before, but Emma hasn't - what does that mean for us?" Ryan is wondering.

According to the Government of Canada's website, in order to qualify as a first-time homebuyer, you must not have, at any time in the current calendar year or the preceding four calendar years, lived in a home you owned, or jointly owned, or that your spouse or common-law partner owned or jointly owned, anywhere in the world.

First-Time Homebuyer Incentives in Canada in 2025

There are numerous benefits to being a first-time homebuyer in Canada in 2025. To understand why Ryan was asking the question, let’s walk through each program to see what Emma and Ryan qualify for. Since Ryan sold his property only a year ago (not the required four years to qualify as a first-time homebuyer), they would face some limitations as a couple.

Home Buyers' Plan (HBP)

In Emma and Ryan's case, Emma can withdraw up to $60,000 from her RRSP tax-free as a first-time buyer, but Ryan cannot. Why? Because the HBP requires participants to not have owned a home in the previous four years, and Ryan is only one year out from his condo sale. However, they can still leverage Emma's eligibility to access $60,000 from her RRSPs tax-free for their down payment.

First Home Savings Account

Emma would be able to open and take advantage of the First Home Savings Account. Similar to the HBP definition,  she will be considered to be a first-time home buyer if she did not, at any time in the current calendar year before the account is opened or at any time in the preceding four calendar years, live in a qualifying home as her principal place of residence that either:

• she owned or jointly owned OR
• her spouse or common-law partner (at the time the account is opened) owned or jointly owned

Land Transfer Tax Rebates

Some good news for Emma and Ryan - they may still qualify for partial land transfer tax rebates. These programs vary by province and municipality:

Under the Ontario Land Transfer Tax Rebate, Emma could claim her portion (up to $4,000) of the provincial rebate on her share of the property, while Ryan wouldn’t qualify for his portion.

If Emma and Ryan’s new property is in Toronto, they would be on the hook for the Toronto Land Transfer Tax. However, similar to the provincial program, Emma could claim her portion of the Toronto Land Transfer Tax rebate (up to $4,475).

First-Time Home Buyer Tax Credit

Emma would be eligible to claim this $5,000 non-refundable tax credit on her tax return, providing up to $750 in tax relief. Ryan wouldn't qualify since he’s owned before.

Planning Their Purchase

Given their situation, Emma and Ryan decide to structure their purchase strategically:

• They maximize Emma’s RRSP contributions before buying to take full advantage of her HBP eligibility.
• They consider putting a larger portion of the home in Emma’s name to maximize the land transfer tax rebate (may not work for every couple).
• They plan to claim the First-Time Home Buyer Tax Credit through Emma.
  
  

It is highly recommended to talk to your real estate lawyer to determine your eligibility status. They will review your specific situation, including your ownership history and that of your spouse, to determine your eligibility for various federal, provincial, and municipal programs.

 Frequently Asked Questions (FAQs):

Q: Could Ryan use the HBP if they wait three more years to buy?

A: Yes, once Ryan passes the four-year mark from his previous home sale, he would regain first-time buyer status for the HBP.

Q: Does it matter that Ryan's previous property was a condo, not a house?

A: No, all types of residential properties count as homeownership, including condos, townhouses, and detached homes.

Q: Should they consider waiting to buy until Ryan qualifies for all programs?

A: This depends on their specific circumstances, including current rental costs, market conditions, and financial goals. They should weigh the benefits of waiting against current market opportunities.

Q: Say Ryan’s condo was actually in the USA (as opposed to Canada), does he qualify as a first-time buyer?

A: The criteria for a first-time homebuyer according to the government is that Ryan cannot have owned a property anywhere in the world in the past four years.

Remember, while having one spouse who previously owned property may limit some benefits, careful planning can help you maximize the advantages still available to you.

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