Year-End Tax Savings: Maximizing Benefits for Homeowners

In the home stretch of 2023, it’s the perfect time to give our finances a once-over, especially when it comes to taxes. As much as tax planning should be considered and reviewed year-round, the end-of-the-year dates add an element of urgency to it all. 

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With so many different programs, incentives, and accounts to consider, different strategies cater to investors, home buyers and owners, families with students, generous gift-givers, those with disabilities in the family, and of course, our savvy business owners and employers. 

Tax Deductions for Homeowners in Canada

First-Time Home Buyers’ Tax Credit (HBTC): Qualifying first-time homebuyers can claim a $750 tax credit, provided the property is their primary residence. The most recent proposed changes have increased the amount used to calculate the HBTC to $10,000, which would provide a tax credit of up to $1,500 to eligible home buyers.

Home Buyers Plan (HBP): Residents of Canada with qualifying RRSP contributions can make a tax-free withdrawal of up to $35,000 for their first home’s down payment.

GST/HST New Housing Rebate: If you’ve paid GST or HST on a recent home build or renovation, you may be eligible for a refundable credit.

• Read: How to Use a Home Equity Line of Credit to Buy a Second Property

HBTC for People with Disabilities: Individuals meeting the CRA’s criteria for disabilities may qualify for this tax credit.

Home Accessibility Tax Credit (HATC): Homeowners making permanent renovations for accessibility reasons. As per the 2022 proposed changes to increase the annual expense limit of the HATC to $20,000, which would provide a tax credit of up to $3,000.

Medical Expenses Tax Credit: If you paid for healthcare expenses, you may be able to claim them as eligible medical expenses on your tax return.

Rental Income Deductions: Rental property owners can claim various expenses, including advertising fees, repair costs, property taxes, insurance, and interest on borrowed money.

Capital Cost Allowance (CCA): Accounts for the cost of long-term assets that generate benefits for shareholders over a number of years. It establishes the amount that can be expensed each year for different types of assets.

Tax-Deductible Moving Expenses: Costs associated with moving for a new job, starting a business, or full-time post-secondary studies may be considered deductible.

Home Office Expenses: Homeowners using their principal residence as a place of work may be eligible for home office deductions on utility bills, homeowners’ insurance, internet bills, and office supplies.

Record-Keeping:

Maintaining meticulous records is not just a bureaucratic chore; it’s your financial safety net. Having a record-keeping system in place can be your key to smooth transactions and potential tax benefits. It’s important to keep these records for a six-year period to stay informed of any extended requirements set out by the Canada Revenue Agency. 

• Read: Taxed to the Max? A Step-By-Step Guide to Disputing Your Ontario Property’s Assessed Value

Important Dates

While property ownership comes with its share of responsibilities, being informed about available tax deductions can significantly ease the financial burden. By strategically leveraging these deductions, homeowners can optimize their tax planning and enjoy a more cost-effective ownership experience.

While these tips shed light on ways you can start to take action and capitalize on tax savings, it’s important to recognize that effective tax planning should be an ongoing year-round approach. Armed with this list of ways homeowners can make tax planning work for them, the next step would be to speak with a tax advisor for a more comprehensive understanding of how to minimize your tax liabilities next tax season.