If you’re in the market for your first home (or haven’t been a homeowner for at least four years), you may be able to take advantage of credit for first-time home buyers.
Since 2009, the federal government has allowed first-time home buyers a tax credit to buy their first home. How does this work? You get the amount by multiplying the lowest tax rate for personal income for the year by $5,000. For instance, in 2009, that number was 15 per cent, so the tax credit was $750.
To qualify for the tax credit, you and your intended home must meet these criteria set out by the government:
- You must be residing in Canada.
- The purchase must be a new or existing home and can be a single family home, a semi, condo, apartment, townhome or mobile home.
- You have to live in the home within a year of buying it.
- The home has to be registered in your name or your spouse or common-law partner’s name.
- You haven’t been a homeowner in the last four years, nor can you have lived in a home owned by your spouse or common-law partner in the last four years.
- You have to prove homeownership with valid documents.
How to claim the tax
First-time home buyers can claim the tax on their Schedule 1 tax form, line 369. Enter the amount of $5,000 on that line (the reduction in your taxes will depend on the percentage of tax credit rate in the year you’re applying). The credit can be divided between you and your partner’s return, but the total combined can’t be more than $5,000.
For people with disabilities
Those with a disability are eligible for the credit even if it’s not the first home you’re buying. Persons with a disability qualify for a disability sum on their tax form in the same year they buy the home. They can claim the First-Time Home Buyers’ Tax Credit if the home is bought to meet their needs and they live in the residence a year from when it is purchased.
Land Transfer Tax Refund
First-time home buyers in Ontario may also be entitled to a refund of all or part of a land transfer tax all purchasers of land or an interest in land have to pay. In this case, if you’ve ever owned a home before, you won’t qualify for this refund.