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, property taxes, and maintenance costs associated with operating a home.
The good news is that you might qualify for some tax breaks that can help offset some of the many expenses you’re obligated to pay on a regular basis. Canadian homeowners have a number of home tax deductions that they may claim come tax time.
Are you a self-employed individual? Here are some tax concerns you should know about.
First-Time Homebuyer Tax Credit (HBTC)
Are you buying your very first home? If so, you’ve got the opportunity to 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 $750 – was introduced to help Canadians purchase their first home and was designed to help recoup the mounting closing costs associated with buying a home, such as home inspections, land transfer taxes, and legal expenses.
Once you purchase your first house, the credit needs to be claimed within the year that you bought your home. The property must also be eligible for this tax credit and must meet the following criteria:
- Located in Canada
- An existing or new house
- A single, semi-detached, townhouse, condominium, mobile home, or apartment
- May include a share in a co-operative housing program
- Occupied by you within one year of purchase
- Registered in your name (or your spouse’s)
In addition, you 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 $750 first-time homebuyer tax credit, you’ll need to include it with your tax return under line 369.
Click here to learn the difference between a tax credit and a tax deduction in Canada.
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 who is eligible for it. For instance, if you’re not a senior but are supporting one, such as an elderly parent who lives with you, and you spend $5,000 to make your home wheelchair accessible, you may be able to claim that amount on behalf of your parent on your own personal tax return.
Want to know how much it costs to buy a house in your province or city? Check out this infographic.
Medical Expenses Tax Credit
Similar to the HATC, the Medical Expenses 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. This refundable credit is 25% of any qualifying medical expenses, up to a certain amount. It is lowered by 5% of your income (and your spouse’s/partner’s) in excess of $26,277 per family.
The Canadian government lists all the eligible medical expenses that can and cannot be claimed on their website.
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 sizeable amount, you might be able to get most of that money back when it comes time to file your taxes.
You might 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.
Want to learn more about home builder’s mortgages and how to get one? Read this.
Rental Income
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, such as property insurance, marketing the property to attract occupants or interest paid on any money borrowed to purchase or update the property. You can claim such expenses by using tax form T776.
Thinking about renting? Check out what is a rent-to-own home?
Home Office
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
Does owing taxes to the CRA affect your credit score? Find out here.
Final Thoughts
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, which can come in handy to help cover the myriad of expenses related to owning and operating a home.
