The first time Home Buyers Tax Credit on line 369 of your tax return is a credit you receive from the federal government when you purchase a home. This credit was introduced in the 2009 budget as a relief measure for first time homebuyers. You can claim the tax amount based on an amount of $5,000. The tax refund amount is calculated by multiplying the lowest personal income tax rate for the year that the transaction of the new home was closed. If the lowest tax rate for the year is 15%, the tax refund is 15% of $5,000.
To qualify for the credit, you, your spouse or common-law partner must:
- Have acquired a qualifying home
- Not have lived in another home owned by you, your spouse or common-law partner in the year you buy your first home or in any of the 4 preceding years
- Intend to occupy the home as your principal residence
If you are a person with a disability or buying a home for a person with a disability as defined, you are eligible to claim a disability amount for the year; you do not have to be a first time homebuyer to receive this credit. However, the home must be equipped with an accessible environment that is better suited to the personal needs and care of the person with the disability. The person with a disability must occupy the home as intended as a principle residence.
What is a qualifying home?
A housing unit located in Canada, either existing or being constructed, including single family, semidetached, apartments, condominiums, mobile homes, town houses, duplexes, triplexes, fourplexes all qualify. A share in a co-operative housing unit that entitles you to an equity of interest also qualifies.
First time home buyers also qualify for the “Home Buyers Plan” in which each of the spouses can withdraw up-to a maximum of $25,000 from their RRSP as contributions towards their down payment for the first home as defined. The withdrawn amount can be paid back in equal installments for up to 15 years. In the event the RRSP amount is not paid in time, the amount for the relevant year is treated as taxable income.
First time homebuyers in Ontario also qualify for a Land Transfer Tax Refund of a maximum of $2,000. This refund can be claimed at the time of registration if you would like the refund amount to offset transfer tax payable.
If you are looking for a qualified lawyer to handle the transaction of purchasing your new home, please call SBMB Law at 905 883 9242 or visit our website www.sbmblaw.com.