Did you buy, build, sell, or renovate a home in 2023? These tax measures could help you!
CRA SOURCE ARTICLE
If you bought, built, sold, or renovated a home in 2023, you might be wondering what that means for your tax situation. Don’t worry, the Canada Revenue Agency (CRA) is here to help. We have information about tax incentives that can help you with housing costs.
Filing an income tax and benefit return is the first step to qualify for benefits, credits, and other tax incentives. Here are some helpful tips to get you ready for tax-filing season.
Did you buy a home in 2023?
First-time home buyer’s tax credit (HBTC): The HBTC could allow first-time home buyers who acquire a home to claim a non-refundable tax credit of up to $1,500.
Claim the home buyers’ amount: You may be able to claim the home buyers’ amount if both of the following apply:
you (or your spouse or common-law partner) acquired a qualifying home in 2023
you did not live in another home inside or outside Canada that you (or your spouse or common-law partner) owned in the year you acquired the home, or in any of the four previous years (first-time home buyer)
You do not have to be a first-time home buyer if either of the following apply:
You are eligible for the disability tax credit (DTC)
You acquired the home for the benefit of a related person who is eligible for the DTC
You can claim up to $10,000 on your 2023 tax return if you acquired a qualifying home in 2023. You can split the claim with your spouse or common-law partner. However, the combined total cannot be more than $10,000.
Claim the GST/HST new housing rebate: You may be eligible for a new housing rebate for some of the goods and services tax / harmonized sales tax (GST/HST) paid if you did any of the following:
bought new or substantially renovated housing from a builder for use as your (or your relation’s) primary place of residence
bought shares in a cooperative housing corporation for the purpose of using a unit in a new or substantially renovated cooperative housing complex as your primary place of residence
constructed or substantially renovated your own home, or hired someone else to construct or substantially renovate your home, for use as your (or your relation’s) primary place of residence
Tips for first-time home buyers
Home buyers’ plan (HBP): You (or your spouse or common-law partner) may be able to withdraw up to $35,000 from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a specified person with disability. The withdrawal is tax-free if it’s paid back within the required time frames, as outlined on the RRSPs repayments under the HBP web page.
First home savings account (FHSA): If you are a first-time home buyer, you (or your spouse or common-law partner) may be able to use an FHSA to save in order to buy or build a qualifying home on a tax-free basis. There are a few things you should know once you have opened an FHSA:
The new FHSA participation room for contributions to your FHSAs, or transfers from your RRSPs to your FHSAs, is $8,000 per year, with a lifetime FHSA limit of $40,000.
If you opened an FHSA in 2023, you may be able to claim up to $8,000 in FHSA contributions you made by December 31, 2023, as an FHSA deduction on your 2023 tax return.
You are allowed to carry forward any unused FHSA participation room to the next year, up to a maximum of $8,000.
You can transfer property from your RRSPs to your FHSAs without any immediate tax consequences, as long as the transfer is direct, and it is not more than your unused FHSA participation room at the time of the transfer.
Check out the Tax-free first home savings account estimators to help you estimate how much you can save for your down payment and your potential tax savings!
Note: You (or your spouse or common-law partner) can withdraw amounts from your RRSPs under the HBP and make a qualifying withdrawal from your FHSAs for the same qualifying home, as long as you meet all of the conditions at the time of each withdrawal. For information about the HBP conditions, go to How to participate in the home buyers’ plan.
Did you renovate your home in 2023?
Claim home accessibility expenses: You may be able to claim amounts paid for qualifying expenditures for a qualifying renovation made to an eligible dwelling to:
allow a qualifying individual to gain access to the dwelling or be mobile or functional within the dwelling; or
reduce the risk of harm to the qualifying individual within the dwelling or when accessing the dwelling.
You can claim these expenses if one of the following applies:
You are 65 years of age or older at the end of 2023, or you are eligible for the disability tax credit
You are an eligible individual who can claim certain tax credits for a qualifying individual
The annual expense limit of the home accessibility tax credit has increased to $20,000 for 2022 and later tax years.
Claim the multigenerational home renovation tax credit (MHRTC): You may be able to claim a refundable tax credit for certain qualifying expenditures paid for a qualifying renovation to create a self-contained secondary unit within an eligible dwelling. The unit must allow a qualifying individual (a senior or an adult who is eligible for the DTC) to reside with a qualifying relation. Eligible individuals can claim up to $50,000 in qualifying expenditures for each qualifying renovation that they complete. The tax credit is 15% of your qualifying expenditures, up to a maximum of $7,500, for each eligible claim. To help you determine whether you are eligible to claim the MHRTC, visit the eligibility checklist for step-by-step instructions.
Are you planning on selling your home?
Report a sale: if you sold or are considered to have sold a property, you have to report the sale on your tax return for the year you sold it. You must report the sale even if the property was your principal residence. How you report the sale depends on what type of property you sold.
Selling your principal residence: According to the new residential property flipping rule explained below, if you sell a home that was your principal residence, you do not usually have to pay tax on any gain from the sale. However, if the property flipping rule applies to your situation, you will have to pay tax on the full amount of the gain, and not on a capital gain. This is the principal residence exemption. The CRA allows the principal residence exemption only if you report the sale of the property and designate the property as your principal residence on your tax return.
If the property was not your principal residence for every year that you owned it, you may owe tax on the part of the capital gain related to the years the property was not your principal residence.
The residential property flipping rule may apply to your principal residence if all of the following is true:
you owned the property for less than 365 consecutive days before selling it
you did not sell the property because of a life event, as listed on the disposing of your principal residence page
Selling a property other than your principal residence: If you sold or are considered to have sold a property that was not your principal residence, you may have a capital gain or business income. For example, a property that is not your principal residence could be a rental property, a right to acquire property, or a property that you flipped.
Under the new residential property flipping rule, certain sales that would have otherwise resulted in a capital gain will instead result in ordinary business income. This new rule makes sure that profits from flipping property are taxed as business income. For more information about flipped property and life-event exceptions, go to T4037 Capital Gains 2023.
Your intention matters when you buy a property. For information on reporting real estate income, go to our report your real estate income web page.
Tax obligations as a homeowner
Underused housing tax: Learn about the annual federal 1% tax on vacant or underused housing. The tax generally applies to foreign national owners of housing in Canada. However, in some situations, this tax may also apply to some Canadian owners. The CRA has published a new online self-assessment tool that can help you find information about specific ownership conditions. This includes information about exemptions from paying the tax, for which you may qualify.
Accommodation sharing: If you earn income through online platforms related to housing and accommodations, you should be aware of your tax obligations to stay compliant. These platforms include Airbnb, CanadaStays, FlipKey, and VRBO.
The CRA wants you to have every opportunity to use these tax incentives to support your housing costs. It doesn’t matter if you’re a first-time home buyer, a seasoned homeowner, or if you just sold your home, we’re here to help.