First Time Homebuyers save on a Personal Income Tax Credit!

I came across a great tip from our neighbourhood law firm Cassady & Company today.  Many people are searching for new ways to save, benefits for buying a home, incentive programs and tax credits for first time homebuyers. Well this is one tax credit that is overlooked probably a lot of the time, and that is due to it’s relatively new presence in our market. This might not mean that it will be available forever as a simple government budget cut can change all of this, but be sure to know your benefits available and do the leg-work of applying and registering for your applicable credits now!

New Home Buyers Save $750

Now this tax credit is not the same as your property transfer tax, or RRSP First Time Homebuyers credit.  This is a personal income tax credit which you receive when filing your personal income tax return, which generally also means you have until April 30th of the year following your property purchase to claim the credit on your tax return.

The History

Beginning in 2009, a new line was incorporated in the personal income tax return form to allow the buyer to claim the Federal Government First Time Home Buyer’s tax credit. This is a non-refundable tax credit for first-time buyers who acquire a qualifying home after January 27, 2009.

The Maths

The Credit is calculated by multiplying the lowest personal income tax rate for the year by $5,000 and is claimable for the taxation year in which the home is acquired. The maximum amount of the Credit in 2012 will be $750.

The Details

A qualifying home is a housing unit located in Canada. This includes existing homes and those being constructed. Single-family homes, semi-detached homes, townhouses, mobile homes, condominium units and apartments in duplexes, triplexes, fourplexes or apartment buildings, all qualify. A share in a co-operative housing corporation that entitles the buyer to possess and provides an equity interest in a housing unit located in Canada also qualifies. A share that only provides a right to tenancy in the housing unit does not qualify.

An individual will be considered a first-time home buyer if neither the individual nor his or her spouse or common-law partner have owned a principal residence in the calendar year of the new home purchase or in any of the four preceding calendar years. The buyer must intend to occupy the home as a principal place of residence no later than one year after buying it.

Any unused portion of an individual’s Credit may be claimed by the buyer’s spouse or common-law partner. Where more than one buyer is entitled to the Credit (for example, where two friends jointly buy a home), the amount claimed cannot exceed the maximum amount of the Credit claimable by any one of those individuals.

The Credit will also be available for certain home purchases by or for the benefit of an individual eligible for the disability tax credit. If the buyer is a person with a disability or is buying a house for a related person with a disability, they do not have to be a first time home buyer. However, the home must be acquired to enable the person with a disability to live in a more accessible dwelling or in an environment better suited to the personal needs and care of that person.

Still Confused?

For further information, please consult Canada Revenue Agency’s website at:

http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhbtc-eng.html

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