Ontario First-Time Home Buyer Series Part 1: Home Buyer’s Tax Credit
Buying your first home is a big step in your personal and financial life. As a first-time home buyer, you likely have many questions regarding all aspects of the process. In this four-part series, we will be exploring some of the basics regarding the first-time home buying experience so that you can have a good understanding of what to expect and how best to approach this important step both legally and financially.
Part 1: Home Buyer’s Tax Credit
The Home Buyer’s Tax Credit (HBTC) is a federal, non-refundable credit that allows first-time purchasers of homes to claim a tax refund of up to $750 in the year when they purchase a home.
How do you qualify?
To be eligible for this rebate, the purchaser must meet the following 3 conditions:
- You or your spouse/common-law partner must be buying a qualifying home within Canada
- Must intend to occupy the home within one year of purchase
- Cannot have lived in a home owned by you or your spouse within the previous 4 years
What kinds of homes are covered?
Most types of homes qualify for the HBTC , including:
- single-family houses
- semi-detached houses
- mobile homes
- condominium units
- apartments in duplexes, triplexes, fourplexes, or apartment buildings
How do you claim the credit?
To take advantage of this rebate, it must be claimed on your personal tax return for the year affiliated with your home purchase. On line 369 of your federal tax return, you can claim up to $5000 for the purchase of a new home, thus resulting in a maximum credit of $750 (the credit is calculated at the lowest tax bracket of 15%).
Can two people claim the credit?
If you purchase with your spouse, common-law partner, or even a friend, then either one of you can claim the credit (or share it). However, the combined total cannot exceed $750.
Persons with disabilities
Persons with disabilities can actually claim the home buyer’s tax credit even if they are not first-time buyers. If you are eligible for the disability tax credit, then you should be able to purchase a home and claim the credit, providing that the home was purchased for the purposes of increased accessibility.
Additionally, if you have a family member with a disability who will be living in the home, you can even purchase a home for them and claim the credit yourself.
What other rebates or credits are available?
First time home buyers should also be aware of the HST new housing rebate offered in Ontario. This is different from the home buyer’s tax credit. If you are purchasing a new home from a builder, consider exploring whether you qualify for this housing rebate.
When purchasing your first home in Ontario, always consult with your real estate lawyer to ensure that you qualify for the various rebates and credits available to you. If you are a first time home buyer looking to claim a rebate or tax credit and have questions regarding your eligibility, contact real estate lawyer Frank Bourgault at Merovitz Potechin LLP.
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