Tax season can often be challenging, but if you own a home and are used to money flowing out, this is the season when money can start to flow in. How you ask? By taking advantage of federal and/or provincial deductions and credits meant specifically for you!
Tax accountants are on top of their game and most know all the deductions and credits to use to optimize tax filings. Since most of us are not tax accountants, we are going to put on our “accountant” hat and share some tips with you to help you navigate the tax filing mystery tour!
Home Buyers Tax Credit
You can claim $5,000 for the purchase of a “qualifying home” if both of the following apply:
- You or your spouse/ common-law partner acquired a qualifying home; and
- 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 (first-time home buyer).
The next question you have is, what the heck is a “qualifying home”? Simply put, your home must be registered in your and/or your spouse/common-law partner’s name in accordance with the applicable land registration system and located in Canada and the tax rule includes existing homes and homes under construction.
Types of properties include:
- single-family houses;
- semi-detached houses;
- townhouses;
- mobile homes;
- condominium units; and
- apartments in duplexes, triplexes, fourplexes, or apartment buildings.
Home Buyers Plan (HBP)
For first-time home buyers, this is a great plan that can help with your down payment by allowing you to withdraw up to $25,000 from your RRSP to build or buy a home. If you and your partner are both first time home buyers, you can both withdraw the maximum amount! For withdrawals made after March 19, 2019, this is also great news because you will now be allowed to withdraw $35,000 from your RRSP. Note that your HBP withdrawal must be repaid within 15 years beginning in the year of your withdrawal and this will need to be reported on your yearly income tax return.
Are you a landlord? Here are two options for you:
- GST/HST New Residential Rental Property rebate
Great news for you as the new residential rental property rebate is for owners and landlords of new (not existing) residential rental property. Landlords are not normally allowed to claim GST or HST on their returns for amounts that were payable on the purchase of residential property because residential properties are exempt from GST. However, the new residential rental property rebate may allow you to claim some GST and/or the federal percentage of HST.
As a landlord, the first people to reside in your home MUST be tenants. To obtain the rebate, you must make an application to CRA within two years of the closing date of the property. Here is a detailed pdf from the CRA for each province outlining details of the plan and how to apply for your rebate. - Rental Income
If you rent a property that you own, you will need to report the income to the CRA on Form T776, Statement of Real Estate Rentals, which allows you to claim allowable expenses such as advertising, insurance and interest on money you borrow to buy or improve the property. But good news, by claiming these costs, you can reduce the amount of rental income you claim on your taxes.
Home work — literally!
If you run a business from your home, you probably already know many of the deductions you can use to reduce your income; utilities, maintenance, internet, office supplies, cleaning and more. We suggest you check with your accountant for further deductions to reduce your income!Home Accessibility Tax Credit (HATC)
If you or a loved one suffers from a disability or you senior and you have renovated your home to make if more accessible, you may qualify for a maximum of $10,000.
Selling your home? Take note…
Over the past several years, the tax rules have changed, and you are now required to notify the CRA that you have sold a property. If you don’t, you might incur severe penalties and interest assessed against you.
Did you purchase a new home in 2018?
Most of the time sales of new housing are subject to the GST/HST, however, you may qualify for rebates for some of the tax paid.
- GST/HST new housing rebate
- GST/HST new residential rental property rebate
A full outline of the program can be found here.
Now that you have moved, time claim your moving expenses!
Students and employees who have moved over 40 km to be closer to work or school may claim this on their tax returns if the following conditions are met:
- you moved and established a new home to work or run a business at a new location; or
- you moved to be a student in full-time attendance in a post-secondary program at a university, college or other educational institution.
Provincial Tax credits
And last, but certainly not least, are the provincial tax credits that you may be able to claim based on where you live in Canada. We recommend you search your provincial government website for programs.
Here are a list of some of the programs:
- New Brunswick Seniors’ Home Renovation Tax Credit
- Manitoba Education Property Tax Credit
- Quebec Home Buyers Tax Credit
- BC Home Owner Grant
- Ontario Senior Homeowners' Property Tax Grant
We are here to help!
Download our simple tax deduction checklist to ensure you get every tax credit and deduction you’re entitled to so that you don’t need to stress so much this tax season!
If you need help finding a good accountant, give us a call – we’ve got lots of those. We are your partner in your financial life, so don’t hesitate to contact us for any queries, big or small especially as it relates to your home and building your future wealth. Time to get filing!
