The tax benefits of homeownership in Canada

When we think about owning a home, tax credits might not be the first thing that comes to mind. But guess what? Being a homeowner could actually qualify you for some sweet tax breaks, rebates, or benefits that could put some extra cash in your wallet. And who doesn't love that?

Making savvy financial decisions could save you thousands of dollars as a Canadian, so be sure to bookmark this blog as we share the top 10 benefits for homeowners in Canada.

Home office rebate

Do you work from home? There’s a credit for that. Doesn’t matter if you’re self-employed, work remotely, or operate from a home office. If you pay for your own internet, utilities, office supplies, or homeowner’s insurance, a portion of those bills could be covered by the government if you’re eligible.

Rental income deductions

If you own a rental property, don't forget to declare that income on your taxes. In return, you could qualify for deductions on any expenses related to your rental property or farmland. These include heat, hydro, water, insurance, property taxes, advertising fees and more. Claim the full amount of expenses if it is for a rental property, but only a percentage if it is for part of your principal residence. 

Capital Cost Allowance on a rental property (CCA)

Did you know that owning a rental property in Canada can come with some sweet tax benefits? One of these benefits is the Capital Cost Allowance (CCA) deduction. Basically, this means that you can deduct a portion of the cost of your rental property from your taxable income each year, which can really help to lower your overall tax bill.

The CCA deduction covers all kinds of rental property expenses, from buying and renovating the place, to installing new fixtures and appliances. The amount you can deduct depends on the type of property and what exactly you're deducting, but hey, every little bit helps, right?

Deductions from moving for work or school

Have you moved more than 40 kilometres away from home to attend school, start a new job, launch a new business? We hope you kept your receipts, because your moving expenses could be tax-deductible. For a full list of moving costs you can claim, head here.

First-Time Home Buyers’ Incentive (FTHBI)

This benefit allows first-time homebuyers to get 5% to 10% off the price of their home by entering a shared equity agreement with the Canadian Mortgage and Housing Corporation (CMHC). One of the criteria to qualify is an annual household income of no more than $120,000 – or $150,000 if you’re purchasing in Toronto, Vancouver, or Victoria. But there’s a catch: You have to repay the amount to your personal RRSP after 25 years or when the home is sold, whichever comes first. For a full list of criteria for this incentive, click here.

Home Buyers' Plan (HBP)

This credit helps take an edge off your mortgage payments by letting you access money for a bigger down payment tax-free. You can take up to $35,000 from a Registered Retirement Savings Plan (RRSP), or a non-repayable financial gift from an immediate family member. Similar to the First-Time Home Buyer’s Incentive, you’ll have to repay the amount you borrowed in full by contributing to your RRSP when the property is sold or after 25 years, whichever comes first.

Did you know: You’re considered a first-time homebuyer if you’ve never owned a home before anywhere in the world, but also if you did not occupy a home that you or your current spouse or common-law partner owned in the last four years, or if you recently got divorced and purchased a property on your own. 

GST/HST new housing rebate

If you live in Ontario, we hope you’ve heard of the GST/HST rebate. This rebate allows a homeowner to receive a refund on some of the goods and services tax (GST) or the federal portion of the harmonized sales tax (HST) paid for a newly built or substantially renovated house that is yours or your spouse’s primary place of residence. 

One of the criteria for this rebate is the total purchase price of the home must be less than $450,000, otherwise you won’t qualify to recover the federal portion of the HST paid.

Home buyers' tax credit for people with disabilities

If you or your spouse is eligible to receive the disability tax credit from the Canada Revenue Agency, don’t miss out on this one. To qualify, the person with the disability or a supporting family member must have funded the purchase of a home that accommodates the personal needs or care for that individual. And no, you don’t have to be a first-time homebuyer to receive this credit. For more details, read this article.

Home Accessibility Tax Credit (HATC)

The Home Accessibility Tax Credit (HATC) is designed to aid Canadians in making their homes safer and more accessible. This non-refundable tax credit is especially beneficial for individuals aged 65 or older, those holding a valid disability tax certificate, and those supporting a qualifying individual. Under the HATC, up to $10,000 in expenses for eligible renovations can be claimed, offering a tax reduction of 15% of the renovation costs. This can be a significant financial support for those looking to make necessary adjustments to their living spaces.

To qualify for the HATC, the renovations must be permanent and aimed at enhancing accessibility or reducing harm to the eligible individual. This includes modifications for those with mobility issues or other disabilities. The work must be carried out by qualified professional tradespeople to ensure safety and compliance. This tax credit is an important step towards creating a more inclusive and accessible living environment for seniors and disabled individuals.

It's important to note that both the individual and the property need to meet specific requirements to be eligible for the HATC. For those not directly eligible, such as individuals supporting a qualifying senior or disabled person, the HATC can still be claimed. For example, if you spend $5,000 to make your home wheelchair accessible for an elderly parent living with you, you can claim this amount on your tax return. The HATC not only provides financial relief but also encourages the creation of safer, more accessible homes for those in need.

Medical expenses tax credit

If you’ve upgraded your home to accommodate anyone with mobility issues, you can claim up to 25% of qualifying medical expenses (up to a limit). Similar to the HATC, this credit is all about making your home more accessible. This credit is lowered by 5% of your income (and your spouse’s/partner’s) in excess of $26,277 per family.

Keeping more money in your pocket is key as a Canadian homeowner. Keep the savings rolling by reading up on your provincial tax credits and rebates before the end of tax season this year. And if you ever have any questions as to whether you’re eligible for these benefits, get in touch with one of our Pine mortgage agents and we’ll be happy to help.

Maximizing the Home Buyers' Amount

As a first-time buyer, you can leverage the Home Buyers' Amount — a $10,000 tax credit for purchasing a qualifying home, which could be a new construction or an existing home. This tax credit translates to a maximum rebate of $1,500, calculated based on the lowest personal income tax rate of the year you bought your home. To claim this benefit, you need to fill out line 31270 on your annual income tax return​

Benefits of the CMHC Eco Plus Program

The CMHC Eco Plus program rewards homeowners who choose energy-efficient homes. If your new home meets specific energy standards, you could receive a rebate of up to 25% on your mortgage loan insurance premium. The program focuses on homes with certifications recognized by CMHC Eco Plus and recent EnerGuide ratings. Though primarily for new constructions, the program is considering retrofit criteria for future enhancements​

Advantages of Multigenerational Home Renovation Tax Credit

The Multigenerational Home Renovation Tax Credit (MHRTC) is a boon for families looking to accommodate multiple generations under one roof. Eligible renovations that create a self-contained secondary unit for a family member can qualify for a refundable credit of up to $7,500, based on 15% of the expenses, capped at $50,000​

Unlock Savings with Pine: Your Guide to Canadian Homeowner Tax Benefits

In summary, Canadian homeowners have a variety of tax credits and incentives at their disposal, from the Home Accessibility Tax Credit to the Home Buyers' Amount and the CMHC Eco Plus program. These benefits not only enhance your living environment but also offer significant financial advantages. At Pine, we're dedicated to helping you navigate these opportunities effectively. Our expert mortgage agents are equipped to guide you through maximizing these benefits, ensuring you make the most of your property investments. Embrace the financial perks of homeownership with Pine, where your home's potential meets our expertise.

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