Mara sold her starter condo in 2019 and moved in with her partner. Now, five years later, they've gone their separate ways, and she's ready to buy again. As she starts her home search, a critical question keeps coming up: "Does selling my condo years ago mean I'm still a first-time buyer?"
It's a question thousands of Canadians ask every year. Maybe you sold during a career move, after a relationship ended, or simply because life took you in a different direction. The good news? After a certain period, you can regain first-time buyer status and access valuable programs designed to make homeownership more affordable.
The Four-Year Rule: Your Path Back to First-Time Buyer Status
According to the Government of Canada, you qualify as a first-time home buyer if you have not, at any time in the current calendar year or preceding four calendar years, lived in a home you owned or jointly owned anywhere in the world.
This means if you sold your previous property more than four years ago, you're back in the game as a first-time buyer. The clock starts from when you last lived in a home you owned—not from the sale date if you moved out before selling.
Understanding the Timeline
Let's break down how this works in practice:
- Owned and lived in property until December 2019, sold in January 2020: You'd qualify as a first-time buyer starting in 2024
- Moved out in June 2020, but didn't sell until December 2020: You'd qualify starting in 2025
- Inherited a property but never lived there: This typically doesn't affect your first-time buyer status, though you should confirm with a real estate lawyer
The key phrase is "lived in a home you owned." Both conditions must be met—you must have owned it and lived in it.
First-Time Homebuyer Programs You Can Access in 2025
Once you've cleared the four-year threshold, you regain access to valuable first-time homebuyer programs. Here's what's available:
Home Buyers' Plan (HBP)
The HBP allows you to withdraw up to $35,000 from your RRSP tax-free to use toward your down payment. If you're buying with a partner who is also a first-time buyer, you can each withdraw $35,000 for a combined total of $70,000.
Think of this as an interest-free loan to yourself. The only catch? You must repay it within 15 years. Learn more about using your RRSP for down payments and closing costs.
Key requirement: You cannot have owned a home in the past four years, and your RRSP contributions must have been in your account for at least 90 days before withdrawal.
First-Time Home Buyer Incentive
This federal shared-equity program offers:
- 5% or 10% for newly constructed homes
- 5% for resale (existing) homes
- 5% for new or resale mobile/manufactured homes
The government shares in both gains and losses on the property. If you received a 10% incentive on a $400,000 home ($40,000), you'd repay 10% of the home's value when you sell or after 25 years—whichever comes first.
Eligibility criteria:
- Your total annual qualifying income doesn't exceed $120,000
- Your total borrowing doesn't exceed four times your qualifying income
- You meet the four-year rule for first-time buyers
First-Time Home Buyer Tax Credit
This non-refundable tax credit provides up to $750 in tax relief. After purchasing your home, you claim this $5,000 credit on your tax return. It's a small but meaningful benefit that helps offset some of your closing costs in Ontario.
Land Transfer Tax Rebates
Provincial and municipal land transfer tax rebates can save you thousands:
- Ontario Provincial Rebate: Up to $4,000 on the Ontario Land Transfer Tax
- Toronto Municipal Rebate: Up to $4,475 on the Toronto Land Transfer Tax (if purchasing in Toronto)
- British Columbia: Full or partial exemption on the property transfer tax for homes up to $835,000
These rebates alone can save you $4,000-$8,475 depending on your location—money that can go toward furniture, renovations, or building your emergency fund.
New for 2025: Enhanced Mortgage Rules
Recent changes to Canadian mortgage rules have made it easier for returning first-time buyers:
- Higher Price Cap: First-time buyers can now purchase properties up to $1.5 million with less than 20% down (increased from $1 million)
- 30-Year Amortization: Available for first-time buyers and new builds, helping reduce monthly payments
- Ontario HST Rebate: The province has proposed eliminating the 8% provincial HST for first-time buyers purchasing newly built homes valued up to $1 million, potentially saving up to $130,000 when combined with federal GST removal
Does the Type of Property Matter?
A common question: "I only owned a condo before—does that count?"
Yes. All types of residential properties count toward the four-year rule:
- Condominiums
- Townhouses
- Semi-detached homes
- Detached houses
- Mobile homes
The size, type, or value of your previous property doesn't matter. What matters is whether you owned and lived in it within the last four years.
International Property Ownership
Here's something many people don't realize: the four-year rule applies to properties anywhere in the world. If you owned and lived in a property in the United States, Europe, Asia, or anywhere else, it affects your first-time buyer status in Canada.
Mara's situation is straightforward—her condo was in Toronto. But if you owned property internationally, make sure to factor that into your timeline and discuss it with your real estate lawyer.
How Deeded Can Help
At Deeded, we understand that returning to the housing market after years away can feel overwhelming. Our experienced real estate lawyers specialize in helping buyers like you navigate first-time homebuyer benefits.
We'll:
- Verify your eligibility based on your specific ownership timeline
- Identify all federal, provincial, and municipal programs you qualify for
- Structure your purchase to maximize available rebates and incentives
- Handle all legal paperwork through our secure digital platform
- Provide transparent, flat-rate pricing so you know exactly what you'll pay
Our virtual closing process means you can complete everything from home, saving time while ensuring nothing falls through the cracks. We've helped thousands of Canadians navigate the complexities of real estate transactions, and we're here to make your journey back to homeownership smooth and successful.
Frequently Asked Questions
Q: I sold my home 3.5 years ago. Should I wait six more months to buy?
A: It depends on your financial situation and the market. Calculate the potential savings from first-time buyer programs (easily $10,000-$15,000+) and compare that to six months of rent and potential property value changes. In some cases, waiting makes excellent financial sense.
Q: What if I inherited a property but never lived there?
A: Properties you inherited but never lived in typically don't affect your first-time buyer status. However, if you lived in an inherited property, the standard rules apply. Always verify your specific situation with a real estate lawyer.
Q: Can I use the HBP again if I already used it when I bought my first property?
A: Yes, but only if you've fully repaid your previous HBP withdrawal. Once your HBP balance is zero and you meet the four-year rule, you can participate again.
Q: Does owning rental property affect my first-time buyer status for my principal residence?
A: Yes. If you currently own or have lived in any property you own within the last four years—including investment properties—you won't qualify as a first-time buyer, even if you've never owned a principal residence.
Q: What documentation do I need to prove I sold my property more than four years ago?
A: Keep your closing documents, property tax records, and utility bills that show when you moved out. Your real estate lawyer can help gather the necessary documentation to prove your eligibility.
Q: Are there any programs specifically for people returning to homeownership?
A: The programs are the same as for first-time buyers. Once you meet the four-year rule, you're treated identically to someone who has never owned property. This levels the playing field and ensures you have access to the same benefits.
Q: How does separation or divorce affect the four-year rule?
A: If you were a joint owner with a former spouse, your portion of ownership still counts toward the four-year rule. The timeline starts from when you last lived in a property you owned or co-owned, regardless of relationship changes. Consult with a lawyer for your specific situation.
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