First Time Home Buyers’ Tax Credit

Posted on: Tuesday, September 4th, 2012

What is the Home Buyers’ Tax Credit (HBTC)?

The HBTC was introduced in Canada’s Economic Action Plan in 2009 to help first-time home buyers pay the costs that are associated with buying a home. These costs include things such as legal fees, disbursements, and land transfer taxes. The HBTC is a non-refundable income tax credit that is calculated based on a $5,000 amount for a home that qualifies and was purchased/acquired after January 27th 2009. Individuals that are eligible to receive this credit can collect up to $750 in federal tax relief, and both you and your spouse/common-law partner can share the credit that is received (only the maximum of $750). The credit rate is calculated by multiplying $5,000 by the lowest personal income tax rate of the year, which is 15% for 2012; therefore, the credit would be $750.

How do I claim the First Time Home Buyers’ Tax Credit?

In order to claim your tax credit you must complete Schedule 1 when you file your Canadian federal income tax return. On line 369 of Schedule 1 you enter $5,000, which is the maximum amount that can be claimed. This amount can be split between you and your spouse/ common-law partner, or if there are two individuals that are both entitled to the amount because the home is jointly owned, than both individuals can split the amount, but the total must not exceed $5,000.

Is the HBTC connected in any way to the Home Buyers’ Plan (HBP)?

Although the two are similar, and have some coinciding eligibility requirements, they are not connected to one another. This means that if you participate in the HBP this will not affect your eligibility for the HBTC.

You can read this full article in the August 2012 Newsletter by clicking here. If you have any questions about this blog, I invite you to contact me at shari@elliottlawyers.com.

The content of this blog is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

Leave a Reply

You must be logged in to post a comment.