There’s nothing quite like the feeling of buying your first home in Canada. But there may be a significant change on the horizon for potential and existing homeowners in Toronto. With the city proposing a substantial 10.5% increase in residential property taxes, the largest since 1998, it’s important to understand how this could affect your finances.

The Toronto tax hike addresses a nearly $1.8B budget shortfall and includes a 1.5% increase in the city building tax, dedicated to major transit and housing projects. The proposed property tax increase translates to approximately $26.75 more a month, or about $321 more a year, for homeowners. City officials have also warned that without funding from the federal government, property taxes could also increase as high as 16.5%. Public consultations on the 2024 budget are currently underway, offering Toronto residents the opportunity to advocate on hot topics like affordable housing, transit and public safety. 

The following 5 benefits are a mix of tax credits, deductions, and rebates—all of which can help you better manage changing financial realities.

1. Homebuyers’ amount

For first-time homebuyers, the homebuyers’ amount remains a valuable resource for individuals purchasing their first home. If you bought your first home recently, you might qualify for a nonrefundable tax credit of up to $10,000 for homes purchased in 2022 or later. For homes purchased in 2021 or earlier, you can claim $5,000, providing a potential financial buffer against the additional costs incurred by surging taxes.

This credit is available only if neither you nor your spouse has owned a home in the past four years and the home is considered a “qualifying home” by the Canada Revenue Agency (CRA). A qualifying home is any of the following:

  • Single-family

  • Semi-detached

  • Townhouse

  • Mobile home

  • Condo

  • Apartment

There’s no calculation for this credit; it’s a flat rate of $10,000 (or $5,000 if preparing a 2021 or earlier tax return). Either spouse may claim the amount, or it can be split between two spouses.

For homeowners with disabilities, the four-year qualification does not apply. If you are eligible for the disability tax credit (DTC) and purchase a home that’s more accessible, you may claim the homebuyers’ amount. If you purchase a home for a relative who is disabled, you may also qualify for the credit.

2. Home Buyers’ Plan (HBP) repayments

In an era of rising property taxes, the Home Buyers’ Plan (HBP) stands out as a potentially wise strategy for those struggling with increased tax burdens. By allowing first-time buyers to withdraw up to $35,000 from their registered retirement savings plan (RRSP) tax-free to purchase or build a home, the HBP can provide much-needed liquidity.

Many first-time home buyers have discovered the value of the HBP. If you’ve tapped into your RRSP to purchase your home through this plan, start preparing for repayments, which begin the second year after your initial withdrawal. You have up to 15 years to repay your withdrawal.

No need to worry about calculating your repayment amounts. Your Notice of Assessment from the CRA will contain all of the info you need. The CRA will also outline the timeline and payment needed each year until you’ve repaid the entire amount. Any repayments not made will be added to your taxable income in the year they were to be repaid.

3. GST/HST new housing rebate

The Goods and Services Tax/Harmonized Sales Tax (GST/HST) new housing rebate is an even more valuable tool for homeowners. This rebate, designed for those who have purchased a new or substantially renovated home, can provide additional financial relief.

The rebate effectively reduces the financial burden imposed by the GST/HST on such properties. The amount you can receive from the GST/HST new housing rebate depends on the value of the home and how much GST/HST you paid. You can use this form to calculate your rebate.

4. Rental property relief

Anyone owning a rental property will be impacted by the proposed Toronto property tax increase, too. With the rising popularity of income properties, it’s important to declare any rental income on your tax return.

For landlords, property taxes are set to increase by approximately $321 per household per year, which will be reflected on the rental statement portion of their tax return.

Deductible expenses relating to the rental property, such as property taxes, mortgage interest, utilities, insurance, repairs, and maintenance costs, can help lower your taxable income.

By properly declaring rental income and meticulously deducting relevant expenses, property owners can effectively lower their taxable income. The amount they’ll save in taxes depends on their individual rental income and associated expenses.

5. Home accessibility tax credit

Renovations that make homes safer or more accessible for seniors or persons with disabilities may qualify for the home accessibility tax credit (HATC). If you are a senior (65 years or older), hold a valid disability tax certificate, or are supporting a qualifying individual, up to $10,000 in expenses can be claimed.

Big life changes? No problem 

TurboTax helps you find deductions and credits you’re eligible for to save you money at tax time. And, you can connect with a tax expert if you have questions. Get started.