First time home buyers tax credit

First-Time Home Buyers' Tax Credit

(This posting is for personal educational purposes only.  Please consult your tax advisor for your specific situation).

Introduction

If you have acquired a qualifying home after January 27, 2009, you may be eligible to claim $750 ($5,000 x 15%) First-time Home Buyers' amount towards your federal tax.  The credit is a non-refundable tax and usually available only to first-time home buyers.

TAX TIP:

In the case of an individual who is eligible for the disability tax credit an exception to the first-time home buyers' credit applies, provided certain conditions are met.

Conditions

All of the following conditions should be met in order to claim the First-time Home Buyers' tax credit:

1. You or your spouse or common-law partner, acquired a qualifying home after January 27, 2009, and

2. Did not live in another home (owned by you or your spouse or common-law partner) in that year or in any 4 preceding years. For 2015 personal tax purposes, neither an individual nor the individual’s spouse or common-law partner have owned and lived in another home anywhere in Canada in that year or at any time from 2011 to 2014.

TAX TIP:

The above conditions are not applicable for taxpayers with a disability who are eligible to claim the disability tax credit, if they purchase a more accessible or functional home.

What is a Qualifying Home?The following are considered qualifying homes:

1. Single-family houses;

2. Semi-detached houses;

3. Townhouses;

4. Mobile homes;

5. Condominium units;

6. Apartments in duplexes, triplexes, fourplexes, or apartment buildings;

A share in a co-operative housing corporation that entitles the individual to own, and gives an equity interest in a housing unit located in Canada also qualifies.

A qualifying home must be registered with the applicable land registration system under your and/or your spouse’s or common-law partner’s name.  Also, it must be located in Canada (new or already built) with the intention to occupy it as principal residence no later than one year after its acquisition.

Who can claim First-time Home Buyers' tax credit?

The individual buying a home, for any of the following may claim the credit:

• It can be claimed 100% by one individual;

• The credit can be split between you and your spouse or common-law partner, however, the combined total tax credit cannot exceed $5,000; or

• A relative who is entitled to claim the disability amount provided certain conditions are met.

What is Home Buyers' Plan?

Home Buyers' Plan is a program which allows the taxpayer to borrow funds from the Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home.  The maximum amount that can be borrowed is $25,000 (subject to conditions). The taxpayer will have 15 years to repay the borrowed amount.  The first re-payment starts from the second year after the funds were borrowed from RRSP.  For example, if you have borrowed funds in 2015, the re-payment will be due in 2017.Canada Revenue Agency has published a video that can be viewed below: 

We can help

We can help you in filing your personal tax return.  Please feel free to contact us at 647.692.7225 or email us at mail@amsai.ca to book an appointment.