The First-Time Home Buyers' Tax Credit is a federal non-refundable credit that lets an eligible buyer claim $10,000 on the income tax return for the year they bought a qualifying home. Because it is calculated at the lowest federal tax rate, which is 14 per cent for 2026, claiming it reduces federal tax owing by up to $1,400.
The Canada Revenue Agency calls this the home buyers' amount and it sits on line 31270 of the T1 return. It was worth $1,500 for years, back when the lowest federal bracket was taxed at 15 per cent. That rate came down to 14 per cent partway through 2025, so a 2026 purchase now produces the smaller figure.
Two tests apply. The property has to be a qualifying home, which the CRA defines as a housing unit in Canada registered in your name or your spouse's name that you intend to occupy as a principal residence within one year of buying it. Detached houses, semis, townhouses, condominium units and shares in a co-operative housing corporation all count, provided the co-op share carries a right of possession.
The second test is the first-time requirement. Neither you nor your spouse or common-law partner can have lived in a home that either of you owned during the year of purchase or in the four calendar years before that. The window turns on occupancy of an owned home rather than ownership alone, and your partner's history counts as much as yours. Someone who sold in 2021 and has rented since would be eligible again in 2026.
An exception exists for buyers eligible for the disability tax credit, and for those buying a home to benefit a related person who is. The first-time test is waived, provided the home better suits that person's needs.
Spouses and common-law partners can split the amount between them, but the combined claim cannot exceed $10,000. Non-refundable means the credit only reduces tax you actually owe. If your federal tax bill for the year comes in under $1,400, the credit takes it to zero and the remainder is not paid out.
Timing is worth understanding early. The money arrives when you file, often months after possession, so it does nothing for the cash you assemble before closing. It sits alongside the First Home Savings Account and the Home Buyers' Plan, and Ontario buyers should also look at the separate land transfer tax rebates, which do reduce what you pay on closing day.
Related reading: How Much Are Closing Costs When Buying a Home in Toronto?, How Much Down Payment Do You Need in Toronto?, and What Are the First Steps to Buying a Home in Toronto?