April 9, 2013
Tax Credits and Rebates For Homeowners
There’s less than a month until the tax-filing deadline of April 30th. Are you putting off filing yours because you’re afraid of how much you might owe Canada Revenue Agency this year? Well, you could be in luck. If you made the savvy decision to invest in real estate, there are plenty of tax credits and rebates you can claim; not only could they help get you a refund, that’s extra money you could use to pay down your new mortgage even faster. Let’s take a quick look at the major credits and rebates homeowners can qualify for.
First-Time Home Buyers’ Plan (HBP)
The First-Time Home Buyers’ Plan (HBP) is a tax-free way for first-time homebuyers to withdraw money from their RRSP, in order to help pay for their down payment. Normally RRSP withdrawals come at a price – they would be subject to withholding tax. The HBP, however, allows first-time homebuyers to withdraw up to $25,000 from their RRSP without paying tax on it. To ensure you don’t have to pay tax on your withdrawal, you need to reference your T4RSP form on your income tax return. Then, because it’s considered a loan, you’ll have up to 15 years to repay your withdrawal amount back to your RRSP.
First-Time Home Buyers’ Tax Credit (HBTC)
Are you a first-time homebuyer who purchased a qualifying home in 2012? If so, be sure to claim the First-Time Home Buyers’ Tax Credit (HBTC). If you’re single, you can claim a tax credit of $5,000 (which will give you a rebate of $750) or, if you own your house jointly with your spouse, you can each claim $2,500. To claim the HBTC, enter the tax credit amount on line 369 of your Schedule 1 Federal Tax form.
GST/HST New Housing Rebate
Did you purchase a brand new home in 2012? If you paid less than $450,000 for it, you can claim the GST/HST New Housing Rebate. HST can really add up, when you’re buying a new house. Luckily, homeowners in Ontario and B.C. can claim the GST part of the HST, when purchasing, building or undertaking major renovations on their homes. Note: Now that B.C. has gotten rid of HST, this only applies to new homes purchased before March 31, 2013.
Provincial Tax Credits
Property taxes are one of the most expensive carrying costs for homeowners. Luckily, if you’re a homeowner in Ontario, you may be able to recover some of the taxes you have paid through your income tax return. The Ontario Property Tax Credit assists low- and moderate-income families with a tax credit worth up to $963. Be sure to complete the ON-BEN as part of your 2012 personal tax return and, if you qualify, you’ll receive monthly payment starting in July 2013. To find other provincial tax credits that you may be eligible for, visit the CRA website.