Blog > FHSA, Home Buyers' Plan and Land Transfer Tax Refund: A Markham First-Time Buyer's Guide
FHSA, Home Buyers' Plan and Land Transfer Tax Refund: A Markham First-Time Buyer's Guide
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First-Time Home Buyer Services · Markham
How can a first-time buyer in Markham combine the FHSA and the Home Buyers' Plan?
You can use both. Each buyer can withdraw up to $40,000 in FHSA contributions plus growth tax-free, and up to $60,000 from an RRSP under the Home Buyers' Plan. Add Ontario's land transfer tax refund of up to $4,000 at closing.
Saving a down payment for a Markham home is the hardest part of buying for most first-time buyers. The good news is that several government programs stack together, and many buyers use only one or two of them.
Here is how the main programs work, in the order most buyers should think about them.
1. The First Home Savings Account (FHSA)
- Contribute up to $8,000 a year, to a $40,000 lifetime limit.
- Contributions are generally tax-deductible, like an RRSP.
- Qualifying withdrawals for your first home are tax-free, and you never repay them.
- Up to $8,000 of unused room can carry forward to the next year.
- Room only starts once you open the account, so opening early helps, even with a small deposit.
Because it is tax-free with no repayment, most buyers use the FHSA first.
2. The RRSP Home Buyers' Plan (HBP)
- Withdraw up to $60,000 per person from your RRSP to buy a qualifying first home.
- Funds generally need to be in the RRSP for at least 90 days before withdrawal.
- It is a loan to yourself: you repay it to your RRSP over 15 years after a grace period. Missed repayments are added to your taxable income.
Repayment rules have changed in recent years, so confirm the current schedule with the Canada Revenue Agency or your accountant.
3. Ontario's Land Transfer Tax Refund
Eligible first-time buyers in Ontario can receive a refund of up to $4,000 of provincial land transfer tax. Your real estate lawyer usually claims it for you at closing.
Markham is not in the City of Toronto, so Markham buyers pay only the provincial land transfer tax, not Toronto's municipal tax.
4. The Home Buyers' Amount
First-time buyers can claim a federal non-refundable tax credit of $10,000 on their return in the year they buy, which is worth about $1,500. It is easy to miss, so mention it to whoever prepares your taxes.
5. HST Rebates on New Homes
If you are buying a newly built home or pre-construction condo, additional HST rebates may apply. See how much HST a Markham first-time buyer can save for details.
An Illustrative Example for a Couple
| Source | Buyer A | Buyer B |
|---|---|---|
| FHSA contributions (5 years) | $40,000 | $40,000 |
| RRSP Home Buyers' Plan | $30,000 | $30,000 |
| Tax-advantaged down payment funds | $140,000 combined, plus any FHSA growth | |
Illustrative only, not financial or tax advice. Eligibility rules apply. Speak with your mortgage professional and accountant before withdrawing funds.
Don't Forget the Stress Test
Programs help with the down payment, but you still have to qualify for the mortgage. Get pre-approved early, and review how much you need to earn to buy in Markham and how much down payment you need.
Frequently Asked Questions
Can I use both the FHSA and the Home Buyers' Plan?
Yes. Eligible first-time buyers can use both for the same home purchase, which can add up to $100,000 per person before growth.
Do Markham buyers pay Toronto land transfer tax?
No. Markham is outside the City of Toronto, so buyers pay only Ontario's provincial land transfer tax. Eligible first-time buyers can receive a refund of up to $4,000 of it.
What happens to my FHSA if I don't buy a home?
In general, you can transfer the balance to your RRSP without using RRSP contribution room, subject to CRA rules. Confirm the details with your financial institution.