As the month of February winds to the end and the weather moves ever so slowly from snow to rain, what can we look forward to? Tax season! We have all heard the saying April showers bring May flowers, which is another way of saying look for the silver lining. Well, for tax season (April showers), it stands to reason that we need to find the silver lining. This could be the non-refundable tax credits. Let’s focus on Line 369 – The Home buyer’s amount.
The Home buyer’s tax credit has been around since 2009 but it is often a forgotten non-refundable tax credit. An amount of $5000.00 is allowed on Line 369 of your personal tax return if both of the following applies:
- You or your spouse or common-law partner acquired a qualifying home and
- You did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years.
The first rule defines the type of housing that qualifies. The second rule defines you as a first-time home owner.
A qualifying home is defined as located in Canada and registered according to the applicable land registration system. Your real estate agent and/or lawyer would confirm that this process has taken place and provide you with the relevant paperwork. One less thing on your long list during the purchase process. A qualifying home can be a new build or existing and includes: single family, semi-detached, townhouses, mobile homes, condominium units and apartments.
The year of acquisition is defined as the year in which the house is registered in your name and in which the tax credit can be used.
However, there is one exception to the second rule defined as first-time home buyer. If you are eligible for the disability tax credit or if you acquired the home for the benefit of a related person who is eligible for the disability tax credit, then you do not have to follow the first-time home buyer rule.
The last qualifying factor to take advantage of this credit is the intent to live in the purchased house as your principal residence and by no later than one year after the purchase. If this is to be rental property or recreation/weekend property, then it does not fulfill the rule.
The tax credit can be claimed by both you and your spouse or common-law partner, but the total dollar value claimed cannot exceed $5000.00.
Take the time to review the non-refundable credits. There are some hidden gems in the listings. For further information, consult your tax preparer or accountant or phone CRA.
Robin Mountain, CPA, CGA CPB