Tax Benefits of Owning a Home

Buying a home has many benefits. While it’s probably one of the biggest purchases you’ll ever make, there are advantages that can save you money in the long run. There are deductibles and tax benefits you can take advantage of as a homeowner.

There are passive benefits through imputed rent or active benefits like deductions from expenses that come from owning your home. It’s important to understand these benefits so you can figure out what kind of financial advantages that owning your home can offer you.

Quick Links

1. How Homeowner Tax Benefits Work
2. Top Homeowner Benefits
   1. First-Time Home Buyers’ Tax Credit
   2. Home Buyers’ Plan
   3. GST/HST New Housing Rebate
   4. Home Buyers’ Tax Credit for People with Disabilities
   5. Home Accessibility Tax Credit
   6. Medical Expenses Tax Credit
   7. Rental Income Deductions
   8. Capital Cost Allowance
   9. Moving Deductions for Work or School
   10. Working-From Home Tax Credits

How Homeowner Tax Benefits Work

Depending on the benefit you’re going to use, they can work in a few different ways. Deductions allow you to exclude allowable amounts from your taxable income. This can lead to paying less in taxes. These benefits are an incentive to offer homeowners more stability and promote wealth-building.

As a homeowner, you may qualify for one or many tax credit, rebates, and benefits. This can mean extra money in your pocket to save, pay off debt, or take a much needed vacation. Here are some of the tax breaks you may be able to take advantage of.

Top Homeowner Benefits

This tax season, consider investing some time and effort into researching homeowners’ tax breaks. If you’re eligible for any of the following nine, you could save money on your tax bill.

First-Time Home Buyers’ Tax Credit

If you’re a first-time buyer or haven’t owned a home in the last four years, you could qualify for the First-Time Home Buyers’ Tax Credit (HBTC). It’s good for up to $5,000, which allows you to deduct $750 from your income tax for the year. Make sure to look into the home buyers amount so you can see what you can claim.

Home Buyers’ Plan

For Canadian residents of spouses of a resident of Canada, you can take advantage of RRSP contributions. You, and/or your spouse may be eligible to take money out of RRSP’s tax-free if it’s going towards the purchase of your first home. Under the Home Buyers’ Plan (HBP), a first-time home buyer or someone who hasn’t owned a home in the last four years can withdraw a minimum of $35,000 for a down payment. Keep in mind here that you’ll have to repay the borrowed amount within 15 years to avoid being taxed anything you withdrew.

GST/HST New Housing Rebate

When you purchase a new, you may have to pay GST or HST on it. If so, you might be able to get in on the new housing rebate when you’re doing your income tax. The new housing rebate may also be applicable if your home went through a major renovation.

Home Buyers’ Tax Credit for People with Disabilities

When you or your spouse meet the CRA eligibility requirements for a person with disabilities, there is a tax benefit offered even if it’s not the first home you’ve purchased.

Home Accessibility Tax Credit

The Home Accessibility Tax Credit (HATC) helps you save on taxes for renovation costs, good for up to $10,000. You have to meet the following criteria:

• You’re a homeowner who qualifies for the disability tax credit.
• You’re eligible to make a claim for a qualifying individual.
• You’re over 65 years old.

• Renovation need to make the home more accessible, reduce potential harm to the qualifying individual.
• Must be completed by qualified professional people in trades.

Medical Expenses Tax Credit

This is similar to the HATC in that you can claim up to a certain amount to make your home more accessible to yourself or dependents with mobility issues. Qualified people can get up to a 25 percent tax credit refund. This is going to be a predetermined amount that’s set every year.

Rental Income Deductions

If you own real estate that you rent out, you can declare rental income on your taxes. You can also claim any allowable expenses to reduce how much you pay in income tax. These allowable expenses include:

• Property taxes
• Interest on money borrowed to buy or renovate your rental property.

• Advertising fees
• Insurance

Capital Cost Allowance

If you have a rental property, you can also claim Capital Cost Allowance. This is a deduction based on renovations you’ve made to the property as a depreciating asset. It’s important to note that if you should sell the property, you could pay taxes on the value of the Capital Cost Allowance you’d claimed in the past. It’s considered a capital gain so before writing off a renovation, think about your future plans for the property.

Moving Deductions for Work or School

If you move over 40 kms away to start a new business, start a new job, or start school full time, you may be able to write off your moving expenses. Keep your bills that relate to the moving costs like the moving company, hotel, and any legal fees incurred.

Working-From Home Tax Credits

If you’re a remote worker and work from the home you own, you can write off a portion of some home office expenses. This might be a percentage of the utility bills, home insurance, internet, office supplies, and more.

The government has incentives for those who own their own home or are new buyers. Buying a house allows you to deduct a variety of costs that you couldn’t take advantage of through a home rental. There are so many potential deductions that help with mortgage insurance premiums and property taxes. It’s a great way to save money and gain more wealth as your property gains more equity. If you do own your own home, make sure to look through the tax credits that might be available to you.