The Government of Canada offers a special program to help first time home buyers with the purchase of their first house or condo. This is in the form of the FTHB—First Time Home Buyers Tax Credit. The tax credit basically offers a $5000 income tax credit at tax time. This is a credit that is non-refundable and can only be claimed by one owner of the home. For qualifying homes, it can give you up to $750 in federal tax relief. Here are a few of the essential details so you can decide if it applies to you.
In order to qualify for the tax credit, you will need to purchase a home. This home must be your first home or the only home you acquired in the previous four years. The one exception is if you are a person with a disability, but you must be living in the house, and it must be accessible to the person with the disability.
Home purchases must be in Canada, either a house or a housing unit. The official date the credit was offered was January 27, 2009. It must be a single-family use home. This can include duplexes, houses, condos, mobile homes, and apartments. Co-op housing that only grants you a right to live in the housing unit, but will not give you any equity, does not qualify.
If you’re married, or you have a common-law partner, they may be able to claim the HBTC if you don’t qualify, as long as the above rules are applicable. However, only one of you may claim the credit, so you’ll have to decide which one of you will claim it on your tax forms.
Your home must also be registered under the appropriate land registration office in your city, so you may wish to consider the best time of year to purchase a home in order to take advantage of this credit sooner, rather than later.
Homebuyers will be able to find out more about this tax credit on official personal income tax forms. Look for the Schedule 1 Federal Tax. There is a line on there that allows you to claim the credit in the year that you purchased your new home. You can simply claim the credit without supporting documents, but you should be aware that the CRA—Canada Revenue Agency—may request further information in the future. Keep your records in a convenient spot in case you need to photocopy them and send them in.
The HBTC is separate from other homebuyers’ plans that home buyers may be able to apply for, or which can change in the upcoming years.
Remember to claim your tax credit in the year that your home was acquired. This means that if you purchase a house in 2019, but it’s not completed until 2020, and the legal transfer of ownership occurred in 2020, you need to claim it in 2020.
Before you buy a new home, it helps home buyers to understand the tax credits and tax rebates that may benefit you.