There’s nothing quite like the feeling of buying your first home. Knowing you’re free to put a nail in the wall or paint your bathroom purple is a terrific feeling. If you’ve recently purchased your first home, check out these tax tips for homeowners.
Home Buyers’ Amount
If you purchased your first home in 2016, you may qualify for a tax credit of up to $5,000. To qualify, neither you nor your spouse lived in a home owned by either of you within the past 4 years. There’s no calculation for this credit; it’s a flat rate of $5,000. Either spouse may claim the amount or it can be split between the two spouses.
For disabled homeowners, the four-year rule qualification does not apply. If you are eligible for the DTC (disability tax credit) and purchase the home that’s better suited to your disability or access, you may claim the home buyers’ amount. If you purchase a home for a relative who is disabled, you may also qualify for the credit.
Income properties are becoming increasingly popular with rookie home buyers. Whether it’s a basement apartment rental, duplex/triplex or income from short-term rentals such as AirBnB, it’s important to realize your tax obligations. Any rental income you’ve collected from your tenant should be declared on your tax return. Keep receipts from both rent collected and related expenses. Expenses lower your rental income which, in turn, lowers your tax payable. Common expenses include utilities, advertising, and maintenance/repair costs.
Home Buyers’ Plan Repayments (HBP)
Many first-time buyers have discovered the value of the HBP. Borrowing from your RRSPs to help with purchase is a great move. If you participated in the HBP, you have up to 15 years to repay your withdrawal. Luckily, you have a bit of time before your repayment begins. The repayment period begins the second year after the year you withdrew your funds.
No need to worry about calculating your repayment amounts. Your Notice of Assessment will contain all of the info you’ll need. CRA will outline the timeline and payment needed each year until you’ve repaid the entire amount.
GST/HST New Housing Rebate
If you’ve purchased a new home (or substantially renovated home), you may be entitled to a rebate of the GST portion of the tax you paid. Many builders complete the paperwork for you but if you haven’t received the rebate (or credit from the builder directly), apply. If you built the home yourself, you may qualify for a rebate on materials instead.
Many provinces have similar programs for the provincial portion of tax paid on new homes. It’s worth investigating to see if your new home purchase qualifies.
TurboTax helps new homeowners get their taxes done right with step-by-step guidance that asks you simple questions about your year, then automatically searches for all the credits that apply to you.