Are you a first-time home buyer? Do you know there are tax incentives that could help you purchase your first home?
CRA SOURCE ARTICLE
Entering the housing market is not easy these days and this is true in many communities across Canada. Prices are high, competition is stiff and market conditions seem to shift quickly. Many of us wonder how we can break into the market, and how we can stretch our dollars as far as possible.
November is Financial Literacy Month, a time for organizations across Canada to come together to talk about personal finances, and how to manage different aspects of them. When we think about how best to manage our money, and what we want to accomplish with it, purchasing a first home is often at the top of the list. Let’s face it, it is not always easy to know what mechanisms are out there that we can take advantage of. That is why, in November, various financial organizations are talking about available financial tools and resources to get the conversation going!
No surprise that, here at the Canada Revenue Agency (CRA), we want to talk to you about tax incentives. And this year, we particularly want to tell you about housing, and what is available to help. You might be considering whether you can buy your first house. It is possible you feel discouraged by this exercise. Maybe you are so close to breaking through but it hasn’t quite happened yet. You may qualify for benefits, credits, or tax incentives administered by the CRA for first-time homebuyers. It could be that these incentives are just what you need.
Wait, let’s back up for a minute. Before qualifying for these incentives, and other benefits and credits, there is one very important task that you must do. You must file your income tax return. Simple enough, right, but very important! Filing your income tax return is the first step to qualify for any benefits, credits or other tax incentives like the ones for housing.
What are these tax incentives for first-time home buyers you ask?
Here are some new and existing housing benefits and tax credits that could help you buy your first home:
What’s new?
First Home Savings Account (FHSA)
The FHSA is a registered account that could allow you to save for your first home with tax advantages. Contributions are generally tax deductible and withdrawals for the purpose of buying or building a qualifying home are tax-free.
Existing measures for first-time home buyers
Home Buyers’ Plan (HBP)
The HBP could allow you to withdraw up to $35,000 from your registered retirement savings plan (RRSP) to buy or build a home for yourself or a related person with a disability. The withdrawal is tax-free if it is paid back within the required timeframe.
Did you know: You could make withdraw from your FHSA and your RRSP under the HBP for the same home, as long as you meet all of the conditions at the time of each withdrawal.
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.
The GST/HST rebate is available for new home purchases and could reduce upfront costs to help make homeownership more affordable.
Other programs for first-time home buyers
Aside from the incentives administered by the CRA, check out some of the other programs available for first-time home buyers. The Government of Canada offers a first-time home buyer incentive and new construction funding for Indigenous housing for on and off reserve communities in Canada.
To sum up, here is what you need to know. The Government of Canada has benefits, credits, and incentives to support you as a first-time homebuyer. To access these and other tools and resources, make it a habit of filling your income tax return each year!
Cheers to November and Financial Literacy Month!
For more information on the CRA’s Financial Literacy Month initiatives, check out Canada.ca/housing-cra.