Tax Benefits of Home Ownership - RE/MAX nova

Published 04 February 15 02:31 PM | Merv Edinger 

As a potential Home Buyer, I am sure you are like so many others in the same situation & have many questions regarding buying your first home. What many home buyers don't consider when buying a home is the Tax Benefits of Home Ownership. Consult with a Tax accountant for all the tax deductions available to you & you may be surprised at how much money you can recover just by being a homeowner.

First-Time Home Buyers Tax Credit

The value of the Home Buyers Tax Credit is based on $5000 multiplied by the lowest federal income tax rate for the year. In 2013 the lowest federal income tax rate was 15 percent, and it remains the same in 2014, so the value of the HBTC would be $750. Who is eligible for the First-time Home Buyer Tax Credit? If you buy a home & neither you nor your spouse or common-law partner owned and lived in another home in the year of purchase or any of the 4 (four) preceding years. To qualify for the First-Time Home Buyers Tax Credit, a home must be a housing unit located in Canada, including mobile homes, condominiums and apartments. Shares in co-op housing that provide an equity stake also qualify. If you both qualify, you and your spouse or a friend can share the tax credit, but the total can not be more than the total allowable tax credit. 

The Home Buyers Plan

The Home Buyer’s Plan allows those who plan to purchase a residence to withdraw up to $25,000 from their RRSP (Registered Retirement Savings Plan) to help with the purchase or even the construction of a home. The best part is that you can pay it back over a 15-year period without penalty. The plan can also be used to buy a home for a relative who is disabled, although the conditions are slightly different. Starting two years after your withdrawal, you get 15 years to repay the money to your RRSPs without incurring taxes. If you don't pay back the required amount in any year, then it is considered taxable income for that year. You can pay back at a faster rate if you wish. The repayments do not affect your RRSP contribution limit for a given year. 

New Housing Rebate ( GST/HST Tax Rebate )

If you buy a new home ( newly constructed ) as your principal residence, & it is less than $450,000, you may be able to claim the GST/HST new housing rebate too. Ontario & BC residents may also claim the provincial portion of the HST if they buy, build or do a major renovation on their principal residence. Other home tax deductions exist for homes that are built by the owner as well as for residential rental properties. In NS, most builders account for this rebate in their list price with the rebates going back to the builder.

 Renovations for medical reasons

Those with mobility issues who had renovations done to accommodate it can claim this as an expense that was required in order to make their home more accessible. Keep in mind, however, that medical expense reimbursement has to fall within a 12-month period ending in the current tax year. 

Allowable expenses for rentals

Renting out a property you own or that you are currently using? Report your rental income and claim allowable expenses like advertising, insurance and interest on the money you borrow to make improvements. As an income property owner, you can also have your mortgage lender set you in what is referred to as The Smith Manoeuver, which will essentially make all the interest on your mortgage tax deductible.  

Taxpayers who work from home or are self-employed with a home office

 If you work from home, there are a number of expenses that you can deduct if you are either self-employed, a commissioned employee or professional. Examples of such expenses that you may be able to claim are a portion of your heating, home insurance, electricity, cleaning materials, internet service / phone ( if used for business ) etc. You can also have your mortgage lender set you in what is referred to as The Smith Manoeuvre, which will essentially make all the interest on your mortgage tax deductible.

 Selling your home

Typically, the taxes do not apply when you sell your home, but there are cases where it does. If you built the home or sold a home that you don’t currently live in, then you may have to pay the GST or HST. If you operated a business from your home that collected GST / HST, there may be GST / HST applicable to its sale. However, there are a few moving tax deductions, such as if you are being relocated for work, that are available that you may want to take advantage of.

There exist other tax deductions that are available on a province by province basis, such as Manitoba homeowners benefit from two other home tax credits: Education Property tax credit and the School Tax Credit for homeowners. In Ontario, homeowners can apply for the Ontario property tax credit and the Senior Homeowner’s Property tax credit. Contact you Tax accountant & the CRA for more on which ones may be available to you.

Now it is time to get you started on the whole home buying process! Click here on where to begin.

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# sdfsdfsdf said on April 26, 2018 4:01 AM:


# sinees said on April 26, 2018 4:03 AM:

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