Although purchasing your first home can be a real stretch on finances, there is a bit of relief for first time home buyers. The government of Canada has a federal program called the Home Buyer's Tax Credit and it's one of the easiest and simplest benefits for new property owners to receive.The Home Buyers’ tax credit, also known as the Home Buyers’ amount, allows eligible first-time home buyers to claim a $5,000 non-refundable income tax credit which essentially adds up to a $750 tax rebate.
To be eligible to claim the Home Buyers’ tax credit you (or your spouse or common-law partner) must:
Buy a qualifying home registered in your (or your spouse’s or common-law partner’s) name. It can be an existing property or under construction and includes single-family structures, townhouses, condo units and more.
Be a first-time home owner, meaning that you did not reside in a property that you or your spouse or common-law partner owned in the previous four years.
The qualifying home must become your principal place of residence within one year after it’s bought or constructed.
Note that there are exceptions for eligible persons with a disability in that they can apply for the tax credit without needing to be a first-time home buyer.
When it comes time to do your taxes, you put the Home Buyer’s amount of $5,000 on Line 31270 of your income tax return. The government allows you to split the amount with your spouse or common-law partner, but your combined total claims must not exceed $5,000. The credit results in a $750 rebate on the taxes you owe for the year. (The amount is calculated at the lowest personal tax rate, which is presently 15%.)
If you owe less than $750 in taxes for the year, you can only reduce your taxes to $0 — you won’t get an additional refund — as this is a non-refundable tax credit. Be sure to keep all your home buying documentation in case the CRA requires proof of your eligibility for the credit.
Buy a qualifying home registered in your (or your spouse’s or common-law partner’s) name. It can be an existing property or under construction and includes single-family structures, townhouses, condo units and more.
Be a first-time home owner, meaning that you did not reside in a property that you or your spouse or common-law partner owned in the previous four years.
The qualifying home must become your principal place of residence within one year after it’s bought or constructed.
Note that there are exceptions for eligible persons with a disability in that they can apply for the tax credit without needing to be a first-time home buyer.
When it comes time to do your taxes, you put the Home Buyer’s amount of $5,000 on Line 31270 of your income tax return. The government allows you to split the amount with your spouse or common-law partner, but your combined total claims must not exceed $5,000. The credit results in a $750 rebate on the taxes you owe for the year. (The amount is calculated at the lowest personal tax rate, which is presently 15%.)
If you owe less than $750 in taxes for the year, you can only reduce your taxes to $0 — you won’t get an additional refund — as this is a non-refundable tax credit. Be sure to keep all your home buying documentation in case the CRA requires proof of your eligibility for the credit.
For more information we recommend seeking independent advice from a qualified tax accountant.
At York and Associates, Royal LePage Sussex we understand that purchasing your first home can seem daunting. We specialize in helping new home buyers navigate through the complex process to help them become home owners with the home of their dreams.
Email us or call us today at 604-817-7173 to get started with your home search.