5 tax tips for homeowners
To own a home in Canada is an expensive undertaking. However, there are a few tax breaks and incentives available to help.
1. First Home Savings Account (FHSA)
The First Home Savings Account (FHSA) was introduced in 2023, a new registered savings plan designed to help Canadians save for a down payment on their first home. FHSA contributions are tax-deductible (like an RRSP), and withdrawals made to purchase a first home are non-taxable (like a TFSA). You can contribute a maximum of $8,000 per year to a lifetime maximum of $40,000. If you don’t end up purchasing a house, you can transfer the savings to your RRSP or RRIF.
2. Principal residence exemption
When you sell your home, there is no tax on its gain in value, but you must report the sale amount on Schedule 3, Capital Gains (or Losses) of your tax return in the year of the sale and file Form T2091(IND), Designation of a Property as a Principal Residence. There isn’t any tax on the gain, but penalties apply if you are late to report.
3. Home Buyers’ Amount (HBA)
This amount was formerly known as the Home Buyers’ Credit. As a first-time home buyer, you may qualify for a tax credit worth $750. You are considered a “first-time” home buyer if you didn’t live in a home owned by you or your spouse/common-law partner in any of the four preceding years. If you claim the disability tax credit, you do not have to be first-time.
4. Home Buyers’ Plan (HBP)
The 2024 Federal Budget increased the Home Buyers’ Plan limit from $35,000 to $60,000 for RRSP withdrawals for a down payment used to buy or build a home. You have 15 years to pay it back into your RRSP. Generally, it is for a first-time buyer, but you may qualify if you are recently separated or claim the disability tax credit.
5. GST/HST New home rebate
If you bought a new home from a builder, you may be able to claim a portion of the GST/HST that is charged to you. Or, if you built or made substantial renovations to your primary residence, you may also be entitled to a rebate on GST/HST paid.
Find out more about tax programs related to home ownership at the Government of Canada website.
The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. The material is for informational and educational purposes and is not intended to provide specific advice including, without limitation, investment, financial, tax or similar matters.