Did you buy, build, sell or renovate a home in 2021? Here’s what you need to know

CRA SOURCE ARTICLE

If you bought, built, sold or renovated a home in 2021, we’re here to help you with your tax affairs. Here are some helpful tips and information to get you ready for this tax-filing season.

Claim $5,000 on your tax return: The home buyers’ amount (line 31270) is available if:

• you (or your spouse or common-law partner) acquired a qualifying home in 2021; and

• you did not live in another home that you or your spouse or common-law partner owned in the current year or any of the previous four years.

You and your spouse or common-law partner (or another individual you acquired the qualifying home with) can split the claim, but the combined total cannot be more than $5,000. When more than one person is entitled to the amount (for example when two people jointly buy a home), the total of all amounts claimed cannot be more than $5,000. Claiming this amount can result in a non‑refundable tax credit of up to $750.

If you are eligible for the disability tax credit (DTC) or are purchasing the home for the benefit of a related person with a disability, the limitation mentioned in the second bullet above does not apply. The purchase must be made to allow the person with the disability to live in a home that is more accessible, more mobile or functional, or better suited to their needs.

Claim the GST/HST new housing rebate: You may be able to claim a rebate for some of the GST/HST you paid to:

• buy a newly built house (building and land) from a builder to use as your primary place of residence;

• build a new house to use as your primary place of residence;

• substantially renovate a house to use as your primary place of residence.

Please note that as a purchaser, you should ensure that you have not already been credited the new housing rebate by your builder as part of your Purchase and Sale Agreement.

Claim home accessibility expenses: You may be able to claim eligible renovation expenses. The renovations must have been made to allow a qualifying individual to gain access to, or to be mobile or functional within the home or, to reduce the risk of harm to the qualifying individual within the home or when accessing the home. You can claim these expenses if one of the following applies:

• you are a qualifying individual, meaning you are 65 years of age or older at the end of 2021 or, you are eligible for the DTC;

• you are an eligible individual that can claim certain tax credits for a qualifying individual.

If you plan to buy or build a home, you may be able to:

Withdraw up to $35,000 from your registered retirement savings plan (RRSP): You may be able to use the Home Buyers’ Plan (HBP) if:

• you’re a first-time home buyer (not required in certain cases – see below); and

• you will use the home as your principal place of residence within one year of buying or building it.

This plan lets you take money out of your RRSP to buy or build a home for yourself. You have up to 15 years to repay the total amount to your RRSP. Any amount that is not repaid will be added to your income in the year that it is due.

If you are eligible for the DTC, you do not have to be a first-time home buyer to use the HBP. This also applies if you are helping a relative who is eligible for the DTC to buy or build a home. The purchase or construction must be done to allow a person with a disability to live in a home that is more accessible or better suits their needs.

You might also be able to use the HBP following a breakdown of a marriage or common-law partnership where you might not otherwise qualify as a first-time home buyer.

Selling a property

If you sold a property in 2021, you need to:

Report the sale: If you sell a property—even if it is your principal residence—you have to report the sale on your income tax and benefit return for the year you sold the property. How you report depends on what type of property you sell.

Designate the property (if applicable): If you sell your principal residence or are deemed to have disposed of it, you do not usually have to pay tax on any gain from the sale. This is because of the principal residence exemption. Starting with the 2016 tax year, the Canada Revenue Agency (CRA) allows the principal residence exemption only if you report the disposition and designation of the qualifying property as your principal residence on your income tax and benefit return.

If you didn’t report the sale and designation of your principal residence in these years, you need to change your return and file a late designation for the related year as soon as possible. The CRA will be able to accept a late designation in certain circumstances, but a penalty may apply.

If you sold a property that was not your principal residence (such as a rental property or a property that you flipped) or was not your principal residence for every year that you owned it, you need to:

Report the gain or profit you made: Your intention matters when you buy a property. You may owe tax on any resulting gain or profit if:

• you bought a property mainly to sell it or rent it out; or

• it was a secondary property and not your principal residence.

For information on reporting real estate income go to our report your real estate income web page.

You can learn more about taxes and filing by visiting the links above or by scheduling a free consultation with us.