The feeling of owning your own home is hard to top. After investing to become a homeowner, it’s nice to be able to get a few breaks here and there. With tax season fast approaching, let’s take a look at how you can get tax credits and rebates as a homeowner in Canada.
Home buyers’ tax credit
For qualifying home purchases, you can claim $5,000. To be eligible for the tax credit, both of the following conditions need to be met:
- You or your spouse or common-law partner acquired a qualifying home
- You are a first-time home buyer
To qualify as a first-time home buyer, you need to have only lived in the home, which is owned by you, your spouse or common-law partner, in the year that you acquired it or in any of the four previous years. A qualifying home is any of the following:
- Single-family houses
- Semi-detached houses
- Mobile homes
- Condominium units
- Apartments in duplexes, triplexes, fourplexes, or apartment buildings
Home Buyers’ Plan (HBP)
When purchasing or building a home for yourself or a related person with a disability, you can withdraw up to $35,000 from your registered retirement savings plan (RRSP) using the Home Buyers’ Plan (HBP) program. You can withdraw funds from multiple RRSP accounts if you own each account. The funds can be repaid within up to 15 years.
To be eligible for the HBP, you need to meet the following:
- You must be considered a first-time home buyer.
- You must have a written agreement to buy or build a qualifying home for yourself.
Alternatively, you could have a written agreement to buy or build a qualifying home for a related person with a disability, or help a related person with a disability buy or build a qualifying home.
To be considered for buying or building a qualifying home, you need to meet the following:
- You buy or build the home, or you are considered as buying or building it, before October 1st of the year after the year of the withdrawal.
- You buy or build the home alone or with one or more individuals
Several other participating conditions include the following:
- You have to be a resident of Canada at the time of the withdrawal.
- You have to receive or be considered to have received, all withdrawals in the same calendar year.
- Your RRSP contributions must stay in the RRSP for at least 90 days before you can withdraw them under the HBP.
- Neither you nor your spouse, common-law partner or related person with a disability that you buy or build the qualifying home for can own the qualifying home more than 30 days before the withdrawal is made.
- You have to buy or build a qualifying home for yourself, for a related person with a disability, or to help a related person with a disability buy or build a qualifying home before October 1st of the year after the year of the withdrawal.
- You have to fill out Form T1036 (Home Buyers' Plan Request to Withdraw Funds) from an RRSP for each eligible withdrawal.
GST new housing rebate
For new or substantially renovated houses, you can reclaim part of the goods and services tax (GST) that was paid if the house is the individual’s or their relation’s primary place of residence.
For owner-built houses, you may be eligible if you meet the following:
- You built, or engaged someone else to build, a house on land that you already owned or leased.
- You substantially renovated, or engaged someone else to substantially renovate, your existing house (at least 90% of the interior of the existing house is removed or replaced).
- You renovated, or engaged someone else to renovate, your existing house and built, or engaged someone else to build, a major addition to your house that at least doubles the size of the living area of the house (eg. adding a second story to a single-story house).
- You converted a non-residential property into your house.
- You purchased a new or substantially renovated mobile home or a new floating home from a builder of the home (this includes the manufacturer or vendor of the home) or you or someone you hired substantially renovated such a home.
For houses purchased from a builder, you may be eligible if you meet the following:
- You purchased a new or substantially renovated house, including the land, from a builder.
- You purchased a new or substantially renovated mobile home or a new floating home from a builder (this includes the manufacturer or vendor).
- You purchased a share of the capital stock of a co-operative housing corporation.
- You purchased a new or substantially renovated house from a builder where you leased the land from that builder under the same agreement to buy the house and the lease is for 20 years or more or gives you the option to buy the land.
For mobile or floating homes, you can claim the tax rebates as either an owner-built house or a new house purchased from a builder.
GST new residential rental property rebate
If you own a rental property, you may be eligible for the GST new residential rental property rebate. To be eligible, the residential unit must have a fair market value of less than $450,000 at the time the tax was payable for the purchase or self-supply of the property, or it must have a fair market value of less than $112,500 for land or a site in a trailer park. The rental accommodation or land also needs to be intended for long-term use as a residence.
If you are a landlord, you may qualify for the GST rebate if you meet the following:
- You purchased a newly constructed or substantially renovated residential rental property.
- You built your own residential rental property.
- You made an addition to a multiple-unit residential rental complex.
If you are a builder, you may qualify for the GST rebate if you had to account for the GST under the self-supply rules from selling a residential unit to an individual and leasing the related land to that individual under a single written agreement. The rebate is only available if the individual is able to claim the new housing rebate.
Alternatively, you would also be eligible for the rebate if you had to account for the GST under the self-supply or change-in-use rules from making an exempt lease of land used for residential purposes. Examples of this would include the rental of a residential lot or a site in a residential trailer park.
Home Accessibility Tax Credit (HATC)
Tax credits are also available for renovations or expenses for qualifying individuals to gain access, be mobile or be functional within a home or reduces the risk of the individual being harmed in a home. Qualifying individuals can receive up to $10,000 in tax credits across all homes.
To be considered a qualifying individual, you must meet the following:
- An individual who is eligible for the disability tax credit for the year.
- An individual who is 65 years of age or older at the end of a year.
For properties that you rent to others, you can deduct reasonable rental expenses from your rental income. Rental expenses that you can deduct include the following:
- Management and administration fees
- Office expenses
- Prepaid expenses
- Professional fees (includes legal and accounting fees)
- Property taxes
- Repairs and maintenance
- Salaries, wages, and benefits (including employer's contributions)
- Interest and bank charges
- Motor vehicle expenses
- Other rental expenses (includes landscaping costs, condominium fees)
To claim these rental expenses, you will need to fill out Form T776 (Statement of Real Estate Rentals).
Get expert advice
As you can see, a number of tax credits and rebates are available, but a lot of conditions also need to be met to be eligible. If you’re in the market for a new home, why not save yourself the headaches of finding out how to save on the tax on top of all the other stress that comes with searching for a new home? A licensed REALTOR® is an excellent source of information on homes, including eligibility of tax credits for homeowners. With a wealth of experience, a REALTOR® can dependably guide you to find the right home - at a price that is right.