As you know, I have curated this section especially for first time home buyers. My hope is this information will give you some insight on the programs available to you to take advantage of as you embark on this new journey. As always, my goal is to empower you with the right information so you are savvy, prepared and knowledgeable on how to best navigate home buying. Although I have touched on the Home Buyer’s Plan in the past, I have had many questions about this in the past month or so – mainly do the fact that home and condo prices are coming in higher that most have budgeted for and this is a great option to be able to make the purchase more a reality.
Tax Credit
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.