Tax season is here, and if you’re a homeowner or planning to buy a home in Toronto, knowing which tax incentives are available can help you save thousands. The Canada Revenue Agency (CRA) offers several tax credits and deductions designed to support homebuyers, homeowners, and property investors. Below are seven key housing-related tax incentives you should know before filing your 2024 tax return.
1. Home Buyers’ Plan (HBP)
The Home Buyers’ Plan (HBP) allows first-time homebuyers to withdraw up to $60,000 tax-free from their Registered Retirement Savings Plan (RRSP) to buy or build a home. Spouses or common-law partners can withdraw a combined total of $120,000. Withdrawals made after April 16, 2024, qualify for this enhanced limit. Repayment starts within five years rather than the usual two for withdrawals made between January 1, 2022, and December 31, 2025.
2. First Home Savings Account (FHSA)
The First Home Savings Account (FHSA) helps first-time buyers save for a down payment. Contributions are tax-deductible, and you can deposit up to $8,000 per year, with a lifetime cap of $40,000. Unused contribution room carries forward, and funds must be used within 15 years or before the account holder turns 71. If not used, the balance can be transferred tax-free to an RRSP or a Registered Retirement Income Fund (RRIF).
3. Home Buyers’ Amount (HBA)
First-time buyers can claim up to $10,000 under the Home Buyers’ Amount (HBA), also known as the First-Time Home Buyers’ Tax Credit. This non-refundable credit provides up to $1,500 in tax savings. It can be shared with a spouse or common-law partner and is also available to individuals with disabilities, even if they are not first-time buyers.
4. Home Accessibility Tax Credit (HATC)
The Home Accessibility Tax Credit (HATC) supports seniors (65+) and individuals with disabilities, making their homes safer and more accessible. The maximum eligible claim has increased to $20,000, with a credit of 15%, allowing up to $3,000 in savings. Eligible expenses include wheelchair ramps, grab bars, and other accessibility modifications.
5. Multigenerational Home Renovation Tax Credit (MHRTC)
Homeowners who create a secondary unit for a senior family member or an adult with disabilities can claim the Multigenerational Home Renovation Tax Credit (MHRTC). This refundable credit covers 15% of renovation costs, up to $50,000, for a maximum rebate of $7,500. The secondary unit must be occupied within 12 months of completion.
6. GST/HST New Housing Rebate
If you’ve purchased a newly built home for your primary residence, you may qualify for the GST/HST New Housing Rebate. This rebate helps homeowners recover part of the GST or HST paid on a home purchase. To be eligible, the home’s value must be less than $450,000. The rebate also applies to substantially renovated homes and certain mobile or modular homes.
7. Purpose-Built Rental Housing Rebate
Investors in new rental housing developments can benefit from the Purpose-Built Rental Housing Rebate (PBRH), which offers a 100% rebate on the GST or federal portion of the HST. Eligible projects include apartment buildings, student housing, and long-term senior residences. The rebate applies to multi-unit residential buildings with at least four self-contained units or 10 private rooms or suites, provided at least 90% of the units are used for long-term rental.
Maximize Your Tax Savings
Understanding these tax incentives you should know before filing can lead to significant savings, whether you’re a first-time buyer, a homeowner, or a real estate investor. To ensure you maximize your benefits, consult a tax professional or visit the Canada Revenue Agency (CRA) website for the latest updates.
