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14 Jan

First-time homebuyer’s credit: Don’t leave money on the table


Posted by: Aneta Zimnicki

Buying your first home can be exciting but also financially overwhelming. On top of the down payment savings required for a purchase, there is also the burden of closing and other costs. The Canadian federal government is offering to help first-time homebuyers with a tax credit of up to $750. If you purchased your first home, be aware of this benefit and don’t leave money on the table.

There are a number of requirements to qualify for the credit. Firstly, the property needs to be your primary residence, and occupancy needs to be no later than one year after acquisition.

Secondly, you are considered a first-time homebuyer if neither you or your spouse or common-law partner owned and lived in a home in the year you purchased your new home or any of the four preceding calendar years.

Lastly, the rebate is claimed on your income tax return (line 369 of Schedule 1, Federal Tax). The maximum non-refundable tax credit amount is $5000, which translates to a $750 rebate.  If two or more eligible individuals jointly purchase a home, the credit may be shared, but the total credit is still $5000. You must remember to claim the tax credit on the income tax return for the year in which you made the purchase.

There are also special rules for individuals that qualify under Disability Tax Credit, they may be exempt from some of the conditions noted above. Consult the government website for more details and up to date information (link here or search Canada Revenue Agency for  ‘First-Time Home Buyers’ Tax Credit’) .  It is also wise to confirm with your tax professional.

First-time homebuyers also have other benefits, including the RRSP Homebuyers Plan (see blog here ) and a rebate on Land Transfer Tax (varies by province and municipality, consult your real estate lawyer for further details).