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Purchasing your first home is an exciting time, but it can also be intimidating. The high cost of real estate and living, in general, make this process more difficult than ever before with all that's going on around us-the pandemic recovery thing being one example (and yes I know we're not supposed to talk about those things). But don't let those worries get between you and the perfect place for yourself! Legal expenses, inspection fees, land transfer tax. These closing costs really do add up; making purchasing a new residence seem impossible at times when they should just feel like another step forward onto firm ground.

Here’s what you need to know about the First-Time Home Buyers Tax Credit.

Canadian taxpayers can claim the first-time homebuyer credit which is worth $5,000. This means that if you're buying your own place for the very first time and haven't claimed it before on taxes then this might just do wonders! You could end up receiving $750 in total rebates from both federal AND provincial governments - not bad right? The FHTBPC was introduced back in 2009 so we recommend talking to an accountant or tax professional about how best to handle all things taxation-related when dealing with these new developments.

Who can claim the First Time Homebuyers Tax Credit?

How do you know if you are a first-time homebuyer? The Canada Revenue Agency (CRA) sets out a simple list of requirements that determine who counts as first-time homebuyers. Here’s how to know if you qualify:

• You or your partner bought a home that qualifies (more on that below)
• You didn’t live in another home owned by you or your partner in the same year or any of the four years before

The federal definition of a first-time homebuyer is a little different from the definition used by some provinces, which can make it easier to be eligible for the First-Time Home Buyers’ Tax Credit.

Does my home qualify?

The vast majority of homes in Canada qualify for the First-Time Home Buyer’ Tax Credit, but there are a few requirements to keep in mind. Your home qualifies if:

• It is a single-family, semi-detached, townhouse, mobile home, or condo,
• It is an existing or new construction home located in Canada,
• You’ve moved into the home within one year of making the purchase, and
• The home is listed as your principal residence and is registered under your name or your partner’s name.

Note that for cooperative housing units, shares that provide the right to tenancy won’t qualify. Only shares that provide possession of the unit will be eligible.

Claiming a credit for people with disabilities.

If you’re a person with a disability and you claim the Disability Tax Credit on your tax return, you can also claim the First-Time Home Buyers’ Canada Tax Credit. This applies even if you’ve already owned a home in the past. There are a few criteria that you’ll need to meet:

• You must claim the disability amount on your tax return in the same tax year that you purchase the home,
• The home must be suitable for the disabled person’s needs (ie your needs), and
• You must occupy the home within one year of purchasing it.

Claiming the tax credit requires you to fill out Form T2201, Disability Tax Credit Certificate, and have a medical practitioner certify that you have a severe and prolonged impairment.

How do I claim a tax credit?

Claiming the First-Time Home Buyer's Tax Credit is simple. If you’re using online software like Wealthsimple Tax or Turbotax, then answering ‘yes' to their questions about whether your purchases were made for the first time in this tax year will suffice! You can also claim up to $5000 on Line 31270 of Schedule 1 if doing so by hand - that's all there really needs to make sure everything matches wherein CRA expects them to (in other words: don't forget!).

Does this affect my eligibility for the Home Buyers Plan?

The First-Time Homebuyer's Tax Credit is a great program that helps first-time buyers purchase their own homes. However, it should not be confused with the Home Buyers Plan which gives you up to $35,000 from your retirement savings account (RRSP) as an additional down payment on top of what could already come in via traditional loans or other sources like shared equity agreements if applicable.

What other tax credits can I take advantage of?

If you’ve received the First-Time Home Buyers’ Tax Credit, you can still apply for a variety of other first homebuyers’ credits, and grants, including:

• First-time homebuyer incentive: This federal scheme aims to help first-time homebuyers by paying up to 10% of the cost of their home in a shared equity loan. Under this scheme, the government becomes a co-owner of the home. It’s a complex program, so be sure to investigate whether it’s right for you.
• Land transfer tax rebates: Some cities and municipalities offer a rebate to help first-time homebuyers offset the cost of their land transfer tax.
• GST/HST New Housing Rebate: If you paid GST or HST when purchasing your home, you may be eligible for a rebate from your federal or provincial government.
• Home Buyers’ Plan: The federal government allows you to borrow up to $35,000 from your RRSP to purchase your first home.

The Bottom Line

There are a lot of ways to save money when buying your first home, but shopping for low mortgage rates is one that will have you feeling like an instant millionaire. The Polsinello Team can help make this happen with our expertise in finding just what you want!