The April tax deadline is just around the corner. It is important to understand the tax credits available for homeowners and first-time home buyers. Being knowledgable about these deductions and programs can significantly impact your tax filings and potentially optimizing your return.
First-Time Home Buyers’ Tax Credit (HBTC)
The Home Buyers’ Tax Credit (HBTC) is a non-refundable tax credit that allows purchasers to claim an amount of $10,000 on their tax return during the year they purchase their home. First-time home buyers can get a tax rebate of up to $1,500.
Who is eligible?
First-time homebuyers.
You or your partner must have bought a home that qualifies for the HBTC.
You haven’t lived in a home that was owned by yourself or your partner for the last four years.
Qualifying homes:
Primary residences in Canada, includes existing homes and homes under construction.
The following are considered to be qualifying homes: Single-family houses, detached houses, condos, townhomes, duplexes etc.
How to claim?
Claimed in the tax year when the home is purchased, on line 31270 of your tax return.
GST/HST New Housing Rebate
If you build or purchase a new home, you may qualify for a rebate of a portion of the GST/HST paid on the purchase if the home is purchased for use as the primary residence of the purchaser.
Who is eligible?
An individual who purchased new or substantially renovated housing from a builder for use as your primary residence.
Constructed or substantially renovated your own home or hired someone else to construct or substantially renovate your home for use as your primary residence.
Qualifying homes:
New or substantially renovated primary residences if the fair market value of the house when the construction is substantially completed is less than $450,000.
How to claim?
To apply for the rebate, you will need to complete and submit a form from the government website within 2 years after the construction date.
Rental Income Deductions
The rental income deductions allows landlords to deduct reasonable expenses incurred to earn rental income, such as property taxes, repairs and maintenance. However, there are rental expenses that are not deductible, such as land transfer tax and mortgage principal.
Who is eligible?
Property owners/landlords who earn rental income from residential or commercial properties.
Qualifying expenses:
Insurance, advertising, utilities, property taxes, repairs and maintenance etc.
How to claim:
Expenses are deducted in the tax year they are incurred.
Home Accessibility Tax Credit (HATC)
The home accessibility tax credit (HATC) was introduced by the federal government to help make homes safer and more accessible for people with disabilities (those eligible for the disability tax credit) and elderly people (age 65 or over). It offers a 15% non-refundable tax credit on up to $10,000 of eligible home renovation expenses, for a maximum of $1,500 in tax relief per year.
Who is eligible?
Spouses or common-law partners of qualifying individuals.
Caregivers who claim the qualifying individual as an eligible dependent.
Qualifying Individuals:
An individual who is 65 years or older before the end of the taxation year.
Or an individual who is eligible to claim the disability tax credit at any time in the taxation year.
Qualifying renovations:
The renovation must allow the qualifying individual to gain access to, or to be mobile or function within, the eligible dwelling, or reduce the risk of harm to the qualifying individual within the eligible dwelling or in gaining access to the dwelling.
How to claim? Claimed in the tax year when the expenses were incurred.
Multigenerational Home Renovation Tax Credit
The MHRTC provides a one-time 15 percent tax refund for renovation costs up to $50,000 to accommodate a senior family member or an adult with a disability. The maximum $7,500 refund can be used toward the cost of permit fees and renovation goods and services.
Who is eligible?
To be eligible, the resident of the renovated unit must be a family member who is a senior or an adult with a disability.
Qualifying renovations:
The renovation needs to be long-lasting and essential for the eligible home. It’s done to allow the qualifying individual and their family member to live together in the dwelling. This includes establishing a secondary unit within the dwelling.
How to claim?
This credit is claimed on Schedule 12 of your tax return for the tax year in which the renovation period ends.
Note: Underused Housing Tax (UHT)
The Underused Housing Tax is an annual federal 1% tax on the ownership of vacant or underused housing in Canada that took effect on January 1, 2022.
The tax generally applies to foreign owners of housing in Canada. However, in some situations, this tax also applies to some Canadian owners (such as certain partners, trustees, and corporations). Click here to learn more details.
Last but not least, should you need clarification or guidance on the tax credits or other tax info, please don’t hesitate to reach out. Additionally, if you require further assistance or prefer to consult with a tax professional directly, I can provide you with referrals to trusted professionals. Your understanding of the tax credits available to you is essential, and I’m here to ensure you have all the support you need. I’m just a call away!
