First time home buyers quickly learn that buying a new home isn’t just a matter of affording the mortgage payments. There’s your down payment, a deposit, mortgage loan insurance, closing costs, legal fees, moving expenses…it’s a wonder that prospective buyers don’t go running scared when they actually sit down and start crunching the numbers!
Recognizing the financial strain that first time buyers face the Government of Canada, as part of Canada’s Economic Action Plan, introduced the First-Time Home Buyers’ Tax Credit in 2009. This assistance provides a non-refundable $5,000 credit for homebuyers – that’s a savings of up to $750 on your tax return.
Homes that qualify for the Home Buyers’ Tax Credit include single-family homes, semis, townhouses, condos, mobile homes and apartments. The program includes newly built homes, homes in the process of being built and re-sales, but only properties located in Canada qualify.
Qualifying homes must be registered in the name of the person receiving the tax credit and must be occupied as the principal place of residence no later than one year after the home’s purchase. This means that the tax credit can’t be used to buy a cottage or vacation home.
A first-time homebuyer, under the First-Time Home Buyers’ Tax Credit program, is a purchaser or the purchaser’s spouse or common-law partner who has not owned and lived in another home in the year of the qualifying home’s purchase or in the four previous calendar years. For example, Steve and Julie bought a house together in 2013 and want to claim the tax credit. Steve owned a condo in college eight years ago and Julie bought a cottage in 2010. Since Steve’s condo was purchased nearly 10 years ago and Julie’s cottage isn’t a principal residence, they still qualify. Because they bought the house together, they can also share the tax credit to a maximum of $5,000.
To learn more about the benefits of the First-Time Home Buyers’ Tax Credit, whether you qualify or how to make the claim, visit www.cra-arc.gc.ca/hbtc.