As a Canadian homeowner, you’ve got plenty of bills to pay. In addition to your mortgage, you’re also responsible for all those utility bills, property insurance fees, property taxes, and maintenance costs associated with owning a home.
The good news is that you might be able to claim a homeowner tax credit in Canada to offset some of the expenses you pay to buy or own a home. Canadian homeowners have several home tax deductions that they may claim come tax time.
Homeowner Tax Credits In Canada: Key Point Summary
- Homebuyers and homeowners in Canada have several tax credits available to them, as long as eligibility criteria are met.
- Canadian homebuyers and homeowners can keep a few extra thousand dollars in their pockets by claiming specific tax credits and making eligible tax deductions on their income taxes.
- Both the federal and provincial governments offer several tax credits.
Homeowner Tax Credits In Canada When Buying A Home
If you’re in the market to buy a home, there are a few programs and credits that you should know about that can help you keep more money in your pocket when making this significant purchase:
The Home Buyers’ Plan (HBP)
The Home Buyers’ Plan allows you to withdraw from your RRSPs to purchase or build a qualifying home for you or a disabled person without getting taxed on the drawn funds. The HBP withdrawal limit is currently $60,000. To qualify for the HBP, you must meet the following requirements:
- Be a Canadian resident at the time of your RRSP withdrawal under the HBP.
- Have a written contract to purchase or build a qualifying home at the time of your RRSP withdrawal.
- Be a first-time homebuyer.
- Be the primary resident of the home you’re buying within 1 year after buying or building it.
- Buy a home that qualifies under the HBP, including the following:
- Be located in Canada
- Be bought or constructed before October 1st of the year following the year of the initial withdrawal
Note: If you’ve previously used the HBP, you may still be eligible for it if you don’t have a HBP balance during the year you want to use it again.
First Home Savings Account (FHSA)
The First Home Savings Account was created by the federal government to make homebuying more affordable. More specifically, the FHSA helps eligible applicants save up to $40,000 to be used toward the purchase of a first home.
The FHSA is tax-free, which means any earnings on the funds in the account won’t be taxed. Further, contributions to an FHSA are tax-deductible, which will help reduce your taxable income and thereby lower the amount of taxes owed.
First-Time Homebuyer Tax Credit (HBTC)
Are you buying your very first home? If so, you can take advantage of the First-Time Homebuyer Tax Credit on your new home purchase.
This non-refundable tax credit – which can be claimed up to a maximum of $1,500 – was introduced to help Canadians purchase their first home and recoup the mounting closing costs associated with buying a home. This includes home inspections, land transfer taxes, and legal expenses, among others.
Once you purchase your first house, the First-Time HBTC needs to be claimed within the year that you bought your home.
Are you Eligible For The HBTC?
To be eligible for this tax credit, the property must be:
- Located in Canada
- An existing or new house
- A single, semi-detached, townhouse, condominium, mobile home, or apartment
- Occupied by you within one year of purchase
- Registered in your name (or your spouse’s)
You may also qualify if you own a share in a cooperative housing program that gives you an equity interest in a property.
In addition to property requirements, you also need to meet some criteria yourself before being approved for this tax credit:
- You cannot have owned a residence in the last four years
- You cannot have occupied a home owned by your spouse in the last four years
To claim this $1,500 first-time homebuyer tax credit, you’ll need to include it with your tax return under line 31270.
Homeowner Tax Credits In Canada When You Own A Home
Current homeowners have a few tax credits available to them, such as the following:
GST/HST New Housing Rebate
If you buy a newly constructed home, you will have to pay GST or HST on the purchase price, just like you would with just about every product you buy. While this can certainly add up to a sizable amount, you might be able to get most of that money back when it comes time to file your taxes.
You could be eligible to claim the GST/HST that you paid for the property through the GST/HST new housing rebate if the home you buy is your principal residence and is less than $450,000. Residents of Ontario and British Columbia have the added benefit of claiming the provincial portion of HST if they purchase, build, or make major home improvements on their homes.
Medical Expense Tax Credit
The Medical Expense Tax Credit allows you to claim up to a certain amount to make your home more easily accessible if you or anyone in your home has any mobility issues. The maximum amount you can claim as a medical expense is 25% of your allowable medical expenses for the year.
The Canadian government lists all the eligible medical expenses that can and cannot be claimed on its website.
Rental Income Tax Deductions
A rental property that brings in income from rent cheques may be eligible for tax credits. If you own an investment property that is rented out, you can report the rental income and claim certain expenses. For example, property insurance, marketing costs, or interest paid on any money borrowed to purchase or update the property.
You can claim such expenses by using tax form T776.
Home Office Tax Deductions
More and more people are telecommuting for work these days, giving them the flexibility to work from wherever they choose, including at home. If you work from your own home office, there are several expenses that you can deduct when filing your taxes.
These can include a percentage of:
- Utilities
- Phone bill
- Internet fees
- Property insurance
- Cleaning materials
- Office furniture and equipment
Homeowner Tax Credits In Canada For Renovations
If you need to make adjustments to your home to accommodate seniors or occupants with mobility issues, the following tax credits may be available:
Multigenerational Home Renovation Tax Credit
The Multigenerational Home Renovation Tax Credit allows Canadians to claim a 15% tax credit up to $50,000. The goal is to cover eligible renovation or construction costs incurred to build a secondary suite for extended family members. This tax credit would provide up to $7,500 to support modifications to a home to accommodate multiple generations living under one roof.
Home Accessibility Tax Credit (HATC)
If you are a senior, you’ll want to make sure that your home is safe and easily accessible, especially if you or your spouse have any mobility issues. While making improvements to your home to make it more appropriate for you may be expensive, you may be able to recover some of these costs thanks to the Home Accessibility Tax Credit (HATC) up to a maximum of $20,000. This non-refundable tax credit can be applied to qualifying expenses associated with any work performed or materials purchased to complete a qualifying renovation.
Like the HBTC tax credit, both you and the property need to meet specific requirements in order to be eligible. You must meet any one of the following:
- Be aged 65 years or older
- Hold a valid disability tax certificate
- Support a qualifying individual
As far as the last eligibility requirement is concerned, you may be entitled to claim the HATC tax credit if you’re supporting someone eligible for it. For instance, if you’re not a senior but are supporting one, such as an elderly parent, you may be able to claim a qualifying amount on behalf of your parent on your own personal tax return.
Provincial Homeowner Tax Credits You Can Claim
You may qualify for a federal homeowner tax credit in Canada, but this isn’t the only option available. In addition to the federal tax credits, there are also several provincial homeowner tax credits offered:
British Columbia – Home Renovation Tax Credit For Seniors And Persons With Disabilities
The Home Renovation Tax Credit is available to BC seniors or those with a disability. Eligible applicants can claim either up to $10,000 or an amount of qualifying expenses that was paid or incurred to improve a principal residence, whichever is less.
Saskatchewan – First-Time Homebuyers’ Amount
The First-Time Homebuyers’ Amount allows you to claim $10,000 to buy a qualifying home. To be eligible for this credit, you must be a first-time buyer, which means you cannot have owned another home over the previous 4 years and must live in the home within one year of purchase.
Ontario
If you’re a homeowner in Ontario, you may be eligible for the following tax credits:
Northern Ontario Energy Credit
Low to moderate-income Northern Ontario residents may be eligible for the Northern Ontario Energy Credit to help offset higher energy costs incurred by living in northern parts of the province.
Ontario Energy And Property Tax Credit
The Ontario Energy And Property Tax Credit helps low to moderate-income residents of Ontario cover the cost of sales tax paid on energy bills and property taxes.
Ontario Senior Homeowners’ Property Tax Grant
The Ontario Senior Homeowners’ Property Tax Grant is paid out annually and is available to low or moderate-income senior homeowners who pay property taxes. Seniors must apply for this grant each year when they file their income taxes.
Manitoba
Manitoba offers various tax credits that can help homeowners save on property and school tax.
Education Property Tax Credit
Homeowners in Manitoba who pay property taxes that include school taxes may be eligible for up to $350 in advance for the tax year through the Education Property Tax Credit program. This credit is designed to help offset the costs of school taxes, either through municipal property taxes or income tax returns.
School Tax Credit For Homeowners
Residential and farm property owners in Manitoba can receive a rebate of up to 50% of their gross school tax payable the tax year through the School Tax Credit For Homeowners program. Owners of other types of properties, such as commercial or industrial properties, can receive a 10% rebate of the total of the payable school and education support levies.
Seniors School Tax Rebate
Manitoba seniors who own their homes may qualify for up to $235 through the Seniors School Tax Rebate program. To be eligible, seniors must be at least 55 years old by December 31 of the tax year.
Final Thoughts On Homeowner Tax Credits In Canada
Considering all the potential tax breaks you may get as a homeowner, it’s worth taking the time to speak with your tax advisor or accountant to find out what types of credits you might be eligible for. You might just be able to get a few thousand dollars back in your pocket thanks to various homeowner tax credits in Canada, which can come in handy to help cover the myriad of expenses related to owning and operating a home.
