The First Time Home Buyer Tax Credit Explained

 

If you’re looking to purchase your first home, it pays to know where to find every little bit of financial assistance, because if you are like most people in your decision to purchase a home of your own, the decision will have started with some serious consideration of your financial situation.

 

In 2009, the federal government introduced what it called “the First Time Home Buyer Tax Credit (HBTC)”. The HBTC assists first-time home buyers with the costs associated with the purchase of a home – like legal fees, disbursements, and land transfer taxes – which can be and added burden for first-time home buyers.

 

Here’s a little bit more about it

 

What kind of money are we talking about? It can be up to $5,000 – which would be a real help to anyone. It provides up to $750 in federal tax relief.

 

Wait a minute. This is the government! How are they defining “first-time home buyer?” If neither you nor your spouse or common-law partner have owned and lived in another home in the four calendar years preceding the purchase, than the government considers you “a first-time homebuyer.”

 

But wait, there’s more! Special rules can apply for homes that are accessible or better suited to the people who are eligible for the Disability Tax Credit. In these situations, the HBTC can even be claimed if the first-time home buyer requirements are not met.

What kind of a house can I buy, you ask? A “qualifying home” is generally considered to be a housing unit located in Canada and will be your principal place of residence no later than one year after its acquisition.

 

It’s also good to know that any unused portion of your HBTC may be claimed by the individual’s spouse or common-law partner. When two or more eligible people jointly purchase a home, the credit can be shared – but the total credit amount claimed cannot exceed $5,000.

 

• Remember that the Canada Revenue Agency will expect you to be able to produce documentation supporting the purchase transaction upon request. You will responsible for making sure that all applicable eligibility conditions are met.