Did you know that you can claim the purchase of your new home as a tax credit and receive as much as $750 towards reducing the amount of personal income tax you owe in the year you purchased your home?
Here are some of the highlights of the program:
- The non-refundable tax credit was enacted as part of the 2009 Federal Budget, based on an amount of $5,000 for first-time home buyers who acquire a qualifying home after January 27, 2009.
- The credit is also be available in respect to a home acquired by an individual who is eligible for the disability tax credit (DTC), or by an individual for the benefit of a DTC-eligible relative as long as the home is acquired to allow the DTC-eligible person to live in a more accessible dwelling.
- The credit can be claimed by the individual who purchased the home, or by the spouse or common-law partner of that individual, or can be split between spouses.
- You are eligible for the credit if you did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years.
- You must intend to make the home your primary residence or you must intend that the related person with a disability occupy the home as a principal place of residence no later than one year after it is acquired.
- Almost every type of home qualifies for this program, as long as it is located in Canada. Have a look at the Fact Sheet on the Revenue Canada Website for a complete list of eligible properties.
The HBTC is calculated by multiplying the lowest personal income tax rate for the year of the purchase by $5,000. For instance, if the lowest tax rate is 15%, then the credit will be $750. One thing to note, if the total of your non-refundable tax credits is more than your federal income tax, you will not receive a refund for the HBTC.
For more information, follow this link to an easy-to-understand video provided by Revenue Canada to explain the basic details of the First Time Home Buyer’s Tax Credit program.
Are you thinking about purchasing a house this year? Contact one of our experience mortgage broker today for more practical advice about financing your new home.