You’ve squirreled away enough money for a downpayment, closing costs, an emergency fund, moving fees…and finally get the keys to your very own home. The good news: You bought a house! The bad news: The bills don’t stop there. There are many ongoing expenses associated with homeownership, including utility bills, property insurance, property taxes (which we also wrote a complete guide on), maintenance costs and on and on.
To help ease the financial burden of buying property, the federal and provincial government offer multiple tax breaks to lighten the load. We’ve rounded up a list of the rebates you’ll want to keep in your back pocket, come tax time.
Land transfer tax rebate for first-time homebuyers
There is a rebate in Ontario to offset the cost of land transfer tax — a fee homebuyers are dinged with every time they buy a property. If you’re in Toronto, you have to pay twice — for the province’s land transfer tax, but also a municipal land transfer tax. This can easily cost you tens of thousands of dollars.
The tax rate applied depends on the value of the property and ranges from 0.5 percent of the purchase price (if the home is under $55,000) up to 2.5 percent (for homes worth more than $2 million) for each type of LTT. At the time of writing, the average cost of a home in Toronto is $873,800. This would come to $34,952 in Toronto and Ontario LTT.
First-time homebuyers in Ontario can qualify for a rebate equal to the full amount of their land transfer tax, up to a maximum of $4,000. There is also a rebate to cover Toronto Land Transfer Tax for first-time buyers — equal to the full amount of their municipal land transfer tax, up to a maximum of $4,475. To qualify, you must be a Canadian citizen or permanent Canadian resident, 18 years or older, purchasing a home for the first time, living in the home within nine months of purchasing it, and if you have a spouse, they cannot have owned a home at the same time they were married to you (or common law).
First-Time Home Buyers’ Tax Credit (HBTC)
The First-Time Home Buyers’ Tax Credit was introduced in 2009 to allow Canadians to claim a portion of their home purchase on their personal tax return that same year. The tax credit offers a $5,000 non-refundable income tax credit amount on a qualifying home, providing up to $750 in federal tax relief for eligible individuals. If you have a disability, you can claim this amount anytime you buy a home.
To qualify, you don’t technically have to be a first-time buyer. You simply have to wait a minimum of four years between previous home purchases and live in the home at the time you take advantage of the FTHB. To claim the $750 first-time homebuyer tax credit, all you have to do is include it with your tax return under line 369.
GST/HST New Housing Rebate
If you’re purchasing a new construction home, you will have to pay GST or HST on the price, which can easily add up. Enter the GST/HST Housing Rebate.
You might be eligible to get the money back if the new home you buy is your principal residence and is less than $450,000. Filling in this form can save you thousands of dollars, as it recovers a portion of the goods and services tax (GST) or the federal part of the harmonized sales tax (HST) if all eligibility conditions are met.
You will also be taxed if you perform substantial renovations to an existing home, or are rebuilding a home that was destroyed by fire. In this case, you will also be eligible for the GST/HST New Housing Rebate.
Home accessibility tax credit (HATC)
If you renovate your home to better accommodate someone who is older than 65, or a person with a disability, you can potentially write it off up to $10,000. To qualify, the renovation has to help with mobility, access and function in the home, and reduce the risk of harm or injury for the individual. If you’re performing the renovation yourself, you can potentially claim expenses for building materials, fixtures, equipment rental building plans and permits (note: tools and labour are excluded from this list). Whether you’re a senior making updates to your home or the child of a parent who will benefit from the updates, you can write off the expenses on line 398.
Homeowners can also take advantage of the Medical Expenses Tax Credit. Similar to HATC, it allows you to expense 25 percent of any qualifying medical expenses and home updates that improve mobility and safety in the home. If you or your spouse’s combined income exceeds $26,277, the amount you can claim is reduced to 20 percent of the expenditures.
The Ontario Senior Homeowners’ Property Tax Grant
This is a yearly grant that helps seniors with low-to-moderate incomes offset taxes on their property. Depending on the adjusted family net income, a senior may receive up to $500 yearly.
“Part of the problem with increasing tax rates is you can be asset rich and income poor,” says David Amborski, the director at the Centre for Urban Research and Land Development. “Take for example, a senior citizen. If they have a fixed income as a pensioner, and they have a very expensive asset, they may not have the income to sustain the increases. One of the issues with property tax is — are you taxing income or taxing wealth? Just because people have a large asset doesn’t mean they have the income to pay very high taxes.”
The Ontario government takes it a step further, allowing seniors with incomes under $37,125 or seniors with disabilities to defer tax payments until they sell their house. This is called the Provincial Land Tax Deferral Program for Low-Income Seniors and Low-Income Persons with Disabilities and offers relief up to $5,000 in property taxes each year with a small interest fee.
Moving expenses
Moving expenses can easily add up. If you’re buying a home to move either for work or school, you can claim all of the costs on line 219 — so long as the move brings you 40 kilometers closer to your workplace or school.
Home business tax breaks
Starting a biz in your basement? You can claim tax breaks including mortgage payments, utilities, internet, etc. The only catch — you can’t claim more than your total net income.
Rental income
If you bought an investment property and have tenants living there, you can report the rental income by filling out tax form T776. You can also claim specific expenses associated with running the property including property insurance, marketing, interest paid on money borrowed for the downpayment, repairs, etc.
