How buying or owning a home can help you save your taxes??
Having a home is not only an essential but one of the major investments an individual or family does in its lifetime. Here are certain points which might be useful for you.
- Tax credit: First time Home Buyers tax Credit (HBTC) was introduced in year 2009. HBTC amount applies to qualifying homes acquired after January 27, 2009, and provides up to $750 in federal tax relief. An Individual is considered to be first time home buyer if neither the individual, nor spouse or common law partner owned a home in the last five years.
- Disability tax Credit: There is a special clause for tax credit and it applies to the homes which are better accessible for the personal need of the individual. In this cast Home Buyers Tax credit can be claimed even if one doesn’t meet the first time home buyer requirement.
- RRSP usage for First Time home buyers: There is another facility for First time home buyers can borrow, tax free, up to $25000 from the RRSP for purchasing a home. This amount withdrawn from RRSP can be returned back in fifteen years. One will be required to pay back 1/15th of the loan each year for the next fifteen years..
- Home Office: There are certain professions for which one need to have an office and rather then using an actual commercial office, the claimant can use certain portion of home as home office. In such a situation allowable deductions are utilities (heat, hydro, and water), business phone, general repairs and maintenance, internet, condominium fees. Expenses are not claimed 100%, but are prorated based on how much square footage is used as home office
- No Capital gains: After the sale of principal residence, the profit made on it is considered as tax free profit. A principal residence can be any one of the following-
- a house;
- a cottage;
- condominium;
- an apartment in an apartment building;
- an apartment in a duplex; or
- a trailer, mobile home, or houseboat.
For tax Purpose, a family unit consists of you, your spouse (or common-law partner) and any unmarried children under the age of 18.
- Rent Out: One can rent out certain portion of house such as basement or a room. Since the owner id still living in the house, it is still considered as principal residence until that particular area being rented is not the main use of home.