The First-Time Home Buyers Tax Credit (HBTC) is one of the measures provided by the federal government in 2009 to encourage investment in Canadian housing.
For 2009 and subsequent years, the HBTC is a new non-refundable tax credit, based on an amount of $5,000, for certain home buyers that acquire a qualifying home after January 27, 2009 (i.e., generally means that the closing is after this date).
The HBTC is calculated by multiplying the lowest personal income tax rate for the year (15% in 2009) by $5,000. For 2009, the credit was $750. Each year, the credit is recalculated, so it may be higher or lower than previous years.
How do you qualify for the tax credit? You, and anyone you purchase the home with must be considered a first time home buyer to be eligible for the tax credit. The home must be used as your principal residence, and if you purchase with your spouse, common-law partner, or even a friend, then either one of you can claim the credit (or share it). However, the combined total cannot exceed $750.
If you are a person with a disability or are buying a house for a related person with a disability, you do not have to be a first time home buyer. See the Government of Canada website for further details.
What is a qualifying home?
To qualify for the First-Time Home Buyers Tax Credit, a home must be a housing unit located in Canada, including mobile homes, condominiums, and apartments. A share in a co-operative housing corporation that entitles you to possess, and gives you an equity interest in, a housing unit located in Canada also qualifies. However, a share that only provides you with a right to tenancy in the housing unit does not qualify.
To qualify for the First-Time Home Buyers Tax Credit, a home must be a housing unit located in Canada, including mobile homes, condominiums, and apartments. A share in a co-operative housing corporation that entitles you to possess, and gives you an equity interest in, a housing unit located in Canada also qualifies. However, a share that only provides you with a right to tenancy in the housing unit does not qualify.
Also, you must intend to occupy the home or you must intend that the related person with a disability occupy the home as a principal place of residence no later than one year after it is acquired.
How to Claim the First-Time Home Buyers Tax Credit? First-time homebuyers purchasing a home may claim the HBTC on their income tax returns. Starting with the 2009 taxation year, line 369 is incorporated into the Schedule 1, Federal Tax to allow you to claim the credit in the year in which you acquired the qualifying home.
The home must be registered in your or your spouse's or common-law partner's name in accordance with the applicable land registration system.
Claimants should ensure that documentation supporting the purchase transaction is available if requested by the Canada Revenue Agency. Claimants are also responsible for making sure that all applicable eligibility conditions are met.
Keep the HBTC in mind when you consider buying a Canadian home. It’s just another great reason to take the final step of real estate home ownership.
For more Information visit: http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhbtc-eng.html
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