Did You Know.... About the First Time Home Buyer's Tax Credit?

June 23, 2011 by Jennifer Cookson

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 associate today for more practical advice about financing your new home.