Buying your first home is as exciting as it is expensive. Saving for a down payment and covering legal fees, disbursements and land transfer taxes, not to mention moving expenses, can be daunting. Fortunately, since 2009, the federal government has offered tax relief in the form of the First-Time Home Buyers’ Tax Credit.
This assistance provides a non-refundable $5,000 credit for homebuyers for a qualifying home—up to $750 of savings on your tax return!
Qualifying homes can be single-family homes, semis, townhouses, condos, mobile homes, apartments or even co-ops, as long as the co-op agreement gives you ownership of the property. Co-ops that only offer tenancy would not qualify. The program includes newly built homes, homes in the process of being built and resales, but only properties located in Canada qualify.
Qualifying homes must be registered in the name of the person receiving the tax credit and must be occupied as the principal place of residence no later than one year after the home’s purchase. This means that the tax credit can’t be used to buy a cottage or vacation home.
A first-time homebuyer, under the First-Time Home Buyers’ Tax Credit program, is a purchaser or the purchaser’s spouse or common-law partner who has not owned and lived in another home in the year of the qualifying home’s purchase or in the four previous calendar years. For example, Robin and Ali bought a house together in 2012 and want to claim the tax credit. Robin owned a condo in college 10 years ago and Ali bought a cottage in 2009. Since Robin’s condo was purchased over 10 years ago and Ali’s cottage isn’t a principal residence, they still qualify! Because they bought the house together, they can also share the tax credit to a maximum of $5,000.
Special rules apply to people purchasing a home that is more accessible. Those who qualify for the Disability Tax Credit can also claim the First-Time Home Buyers’ Tax Credit regardless of whether it is their first home purchase. So if you need to buy a home that is more suited to your needs, such as more accessible, or with an easier layout for your living requirements, you can claim the First-Time Home Buyers’ Tax Credit even if you currently own your own home. You can even claim the credit if you purchase a home for a disabled relative.
To learn more about the benefits of the First-Time Home Buyers’ Tax Credit, whether you qualify or how to make the claim, ask your Realtor or visit www.cra-arc.gc.ca/hbtc