When buying a home, there are numerous things that have to be thought about and attended to. How it may have an effect on your taxes is not likely going to be a priority at this time. Once settled in and tax season arrives then homebuyers for that tax year have to know what effect their home purchase is going to have on their tax situation.

 Home Buyers Credit

credit

There are some individuals who have not owned their own home for several years then decided to become a homeowner once again. If the non-ownership was for a period of four or more years, then that individual may be eligible for a tax credit up to a maximum of $5,000. If the spouse of the homeowner owned a home within the last four years, then the homeowner must not have lived in that house to be eligible for this credit. Either spouse can apply for the credit, and there is an option to split the credit between the two taxpayers.

Disabled Homeowners

disabled persons playing Basketball

Some individuals with disabilities are eligible for the disability tax credit. If these individuals have purchased a home, then the four-year rule for the home buyers credit does not apply. Provided the new home was purchased to make it better for the disabled individual or to provide them with better access.

A relative’s Credit

Some family members will purchase a home better suited for an individual who has a disability. In this case that relative may be eligible for the home buyers credit.

Utilizing the HBP

There are a lot of people who bought a home and used funds from their RRSPs to do this. This is the Home Buyers Plan. Those that have done so have a maximum of 15 years to replace the money into their RRSP account. The government gives a grace period of two years before repayment into the plan must begin. The repayment process is easy to follow as the CRA issues notices of assessments with all the repayment information on it. The timeline for repayment, as well as the payment amounts, are outlined.

HST and GST Ontario Rebate for Housing

Those who have bought a home in Ontario may be eligible for a rebate on the HST and GST.

The HST – Federal Portion:

To qualify for this segment of the tax, the purchase price of the house must be less than $450,000.

The HST-Provincial Portion

To qualify the homeowner has to have purchased the house as the primary residence and

The homeowner is eligible for the GST/HST rebate,

Or eligibility is possible if the cost of the house was less than the $450,000. Maximum.

Maximum Rebate:

The maximum amount that can be received by way of credit would be $24,000.

It turns out that the home buyer who is eligible for this credit would be paying a provincial tax of 2% on the first $400,000 of the purchase price then 8% on the balance. The Provincial rebate portion is not capped at the $450,000 like the Federal portion is.

New Housing Rebate for GST and HST

New House Keys

When purchasing a home, the homebuyer will have to pay HST, which is the federal portion of taxes. For those who are buying a new home or one that has been significantly renovated then they may be entitled to a rebate of the HST which is the federal portion and  GST, which is the provincial portion. It is important that the home buyer get the necessary paperwork for this from the builder. In many cases, the rebate comes directly from the builder.

There are others who have built their new home themselves. There is a chance that they too can receive a GST rebate for what they paid on the materials used for the build.

The claiming of these taxes can be complex. It is important that an individual who is not sure of doing their taxes properly rely on a professional that is familiar with these rebates.

HATC Credit

Another potential tax credit that may be available to some is the Home Accessibility Tax Credit.

This may be applicable for those individuals who have a disability or for seniors. This applies to renovations that have been done by the homeowner to make the home safer.  To qualify:

  • The homeowner must be 65 or older, or
  • Have a disability tax certificate

The amount that can be claimed for this tax credit is $10,000 in expenses.

Homeowners of Rental Property

Landlords of rental property may be eligible for the GST/HST new residential rental property rebate.

There are those who invest in a property that they can rent out to earn more income. In this case, many of the rebates mentioned here may not be applicable as this is not the primary home. There are other expenses that can be claimed, but these are not rebates. For example, there are certain allowable expenses that can be claimed against the rent that is being collected.

Homeowners Working From Home

working from home

Sometimes homeowners will buy another home so that they can have the extra space to work from home in. As long as its the primary home then some of the credits mentioned may be applicable. In addition to this, there may be some of the household expenses that can be claimed that are attributed to the use of the space being allotted for the home business. These are important to keep track of as they can help to offset the income being generated by the home business.

The one thing to keep in mind when it comes to tax rebates is that the homeowner should always check to see what is available on the Federal as well as Provincial tax levels. Also, these can change year by year as the CRA updates the tax rules. It should never be assumed that because credit was available one year that it will be applicable the next year.

For those who are keen on knowing what tax credits they are eligible for they should research these at the time they are buying their home.

Resources:

https://www.srjca.com/hst-and-gst-housing-rebate-ontario
https://turbotax.intuit.ca/tips/tax-tips-for-new-homeowners-6633
https://turbotax.intuit.ca/tips/home-tax-deductions-credits-in-canada-5223
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/charge-collect-home-construction/new-housing-rebate.html
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/charge-collect-home-construction/new-residential-rental-property-rebate.html