In an effort to assist Canaidans in purchasing their first home, the First-time Home Buyers’ Tax Credit was born. This initiative was conceived as a part of ‘Canada’s Economic Action Plan’ designed to help recover closing costs such as legal expenses, inspections, and land transfer taxes.
To reap the benefits of this tax credit, you and your spouse or common-law partner can claim a combined $5,000. If you were to assume a 15% tax rate, which is the lowest tax rate, this $5,000 claim would mean you are eligible for a one time $750 tax reduction. Note, you can apply for the entire $5,000 credit on your tax credit, or share it with your spouse or common-law partner.
This is a non-refundable credit and will reduce the amount of taxes you owe by $750. If you don’t owe income tax the year you buy the home, there’s no benefit to claiming the HBTC.
With current taxation rates considered, the rebate works out to $750 for all first time home buyers. Once you purchase your home, the credit must be claimed within the year or purchase and is non-refundable. To receive your $750, you must include it with your personal tax return.