Can I Get the First-Time Home Buyer Incentive If I Own a Home in Another Country?
Yes, you may qualify for the First-Time Home Buyer Incentive (FTHBI) even if you own a home in another country, but only if that home was not your principal residence in the past four years. The key determinant is whether you meet the Canada Revenue Agency (CRA) definition of a first-time buyer, which focuses on your Canadian tax residency and principal residence history.
Understanding the First-Time Home Buyer Incentive
The FTHBI is a shared-equity mortgage program launched by the Canadian government to help eligible buyers purchase their first home. It offers a 5% (for homes up to $500,000) or 10% (for homes over $500,000) incentive toward the purchase price, which is repaid when the home is sold or refinanced. The program is administered by the Canada Mortgage and Housing Corporation (CMHC) and is available in all provinces except Quebec.
Eligibility Criteria: Who Qualifies?
To qualify, you must meet the following conditions:
- Be a first-time home buyer in the last four years (as defined by CRA).
- Have a household income below $120,000 (or $150,000 in high-cost markets like Vancouver or Toronto).
- Obtain a mortgage with a minimum down payment of 5% for homes priced under $500,000.
- Be a Canadian citizen, permanent resident, or protected person.
- Meet the property ownership and residency requirements in Canada.
Ownership of a Home in Another Country
If you own a home in another country, your eligibility for the FTHBI depends on whether that home was your principal residence during the past four years. According to the CRA:
If you (or your spouse/common-law partner) owned and occupied a home you owned elsewhere as your principal residence at any time in the last four years, you are not a first-time home buyer.
This rule applies regardless of whether the home is in Canada or abroad. For example, if you owned and lived in a home in the United States or the UK for the past three years, you would not qualify as a first-time buyer in Canada unless you had no principal residence during that period.
Example Scenario: Owning a Home in the U.S.
Consider Jane, a Canadian citizen who moved to the U.S. in 2020. She owned a condo in Chicago and lived there for the past three years. In 2024, she returns to Canada and wants to buy a home in Toronto. Since her Chicago condo was her principal residence from 2020 to 2023, she does not qualify as a first-time buyer in Canada under the CRA definition. However, if she rented out the Chicago property and did not use it as her principal residence, she might still qualify.
How the Incentive Works: Repayment and Tax Implications
The FTHBI is not a loan or a grant. Instead, it is a shared-equity agreement where the government takes an interest in your home’s value. Here’s how repayment works:
- You must repay the incentive in full when you sell your home, refinance your mortgage, or when the incentive term expires (up to 25 years).
- The repayment amount is calculated based on the lesser of the original incentive value or 100% of the home’s appreciation.
- If the home’s value decreases, you still owe the original incentive amount.
Important: The incentive does not affect your eligibility for other homebuyer programs, but it may impact your mortgage approval if lenders view the shared equity as additional debt.
How to Apply for the First-Time Home Buyer Incentive
1. Complete a pre-purchase counseling session with a CMHC-approved housing counselor.2. Obtain pre-approval for a mortgage with a participating lender.3. Apply online through the CMHC website or your lender.4. Sign the incentive agreement before closing the sale.5. Repay the incentive upon sale, refinance, or term expiration.
Common Mistakes to Avoid
- Assuming ownership abroad disqualifies you automatically: If the foreign home was not your principal residence, you may still qualify.
- Failing to track principal residence history: The CRA requires documentation to prove you did not occupy a home as your principal residence in the past four years.
- Overlooking income thresholds: Exceeding $120,000 (or $150,000 in high-cost markets) eliminates eligibility.
Comparison of Incentive Options
| Option | Share of Purchase Price | Repayment Terms | Best For |
|---|---|---|---|
| 5% Incentive | 5% of the home’s purchase price | Repaid as the lesser of 5% of the home’s value or original incentive amount | Buyers in lower-cost markets |
| 10% Incentive | 10% of the home’s purchase price | Repaid as the lesser of 10% of the home’s value or original incentive amount | Buyers in high-cost markets (e.g., Vancouver, Toronto) |
Conclusion
Owning a home in another country does not automatically disqualify you from the First-Time Home Buyer Incentive in Canada. The critical factor is your principal residence history. If your foreign home was not your primary residence in the past four years, you may still qualify. Always consult with a financial advisor or tax professional to ensure compliance with CRA rules and maximize your eligibility for this valuable program.