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Buying a home usually means land transfer tax where it applies. Selling your principal residence is normally tax-free, but you still report the sale on your return. The FHSA lets you deduct $8,000 a year toward a first home.
A home is the biggest purchase most people make, and the tax side shows up three times: when you buy, while you own it, and when you sell.
What do you pay when you buy?
Many provinces and some cities charge land transfer tax, and a few add extra for foreign buyers or expensive homes. A new home or a big renovation can also carry GST or HST. Run your own price through the land transfer tax calculator and the closing costs calculator, because the total can surprise you.
Saving for a first home? The FHSA lets you put in $8,000 a year, up to $40,000 over your lifetime, and you deduct what you contribute. You can also borrow from your RRSP through the Home Buyers’ Plan. The limits page has the current figures.
What about the years you own it?
Your own home isn’t taxed as income, which is why people rarely think of it as a tax matter. Rent part of it out, though, and that income is yours to report, so see the rental income tax calculator.
What happens when you sell?
If the home was your principal residence for every year you owned it, the gain is normally tax-free, but you must still report the sale and name the home as your principal residence on your return. Selling a rental or second property is different, because half of the gain is added to your income. The capital gains calculator shows how much.
Keep your purchase papers.
Where to read more
The property and tax guide collects our articles on this, and the mortgage affordability calculator helps before you shop.
Before you act on this page
You’re reading a general overview, and it can’t see your slips, your province or your family, so you shouldn’t treat it as advice for your own return. If anything here doesn’t match a letter from the CRA, the letter wins.
Stuck?
Ask a qualified preparer or the CRA itself, and keep the document checklist, the tax calendar and the filing guide close by. Not sure which province’s rules apply to you? The province index lists them all.
Frequently asked questions
Do I pay tax when I sell my home?
Usually not on the gain, if the home qualifies as your principal residence. You still report the sale on your return.
What is land transfer tax?
A tax some provinces and cities charge when a property changes hands. The buyer pays it, and the rate depends on the price and the place.
Can I use my RRSP or FHSA to buy a first home?
Yes. The Home Buyers' Plan lets you borrow from your RRSP, and the FHSA lets you save for a first home with a deduction. Both have rules and limits, so read the CRA pages first.
Does GST or HST apply to a home?
New homes and major renovations usually carry GST or HST. Most resales of a used home don't.
Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.