Buying Real Estate Can Save You Some Tax Money

March 22, 2014 - Updated: April 22, 2014

 

So it’s been some time since I last wrote to this blog and for that my apologies.  Here’s to a happy belated new year everyone.  It’s March and many people are happily thinking of their taxes right about now.  Ok that could be an exaggeration, but I’m sure no one is appreciating the winter we are still going through here in Mississauga, Ontario.  On the brighter side for all you home owners or people who will be soon home owners, I know several ways for you to either save on taxes or get money back from the government.

Home Buyers' Plan (HBP)

The Government encourages people to save for buying homes. The Home Buyers Plan allows you to withdraw (as a loan) up to $25,000 from your registered retirement savings plan (RRSP) to help with the purchase or construction of a home. Certain conditions apply. You are required to submit a request by completing the T1036 tax form that is available. You must then repay the loan, without interest, over a period not to exceed 15 years. 

First-Time Home Buyers' (FTHB) Tax Credit

Buying a home for the first time can seem to be a very complicated and expensive process.  The Federal government wants to encourage people to own homes. The First Time Home Buyers Tax Credit was created to help with this financial burden.  For 2009 and subsequent years, the FTHB is a new non-refundable tax credit of $750  based on 15% of amounts up to $5,000, for first-time home buyers after January 27, 2009.

Ontario Energy and Property Tax Credit (Ontario Trillium Benefit)

This is a tax credit for low to medium income home residence or renters to help pay for energy costs and relief for sales and property tax.  For the year 2014 you can get up to $973 if you are a not senior citizen and up to $1108 if you are a senior.

Ontario Senior Homeowners' Property Tax Grant

This grant helps qualified persons to get up to $500 each year to help with the costs of property taxes.

Rental income deductions

Revenues earned are included on an accrual basis. Expenses incurred in earning rental income must be reasonable. These would include advertising, insurance costs, interest and fees related to borrowing, legal fees preparation of lease documents or collection of overdue rents, maintenance and repairs, management fees and fees to rental agents to manage the property, office expenses, property taxes, travel and utilities.

Business use of home expenses

If as part of your employment you are required by your employer to work from home and you qualify, you can deduct expenses you have paid that are business related so long as you employer does not reimburse you.

If as a part of your self-employment business you use work space in your home as your principal place of business or you use that space only to earn your business income you qualify to deduct a portion of expenses incurred.  These include utility costs, maintenance of your home, telephone, supplies, property taxes, mortgage interest and home insurance. 

GST/HST New Housing Rebate (Seek advice directly from CRA authorities)

Buying a newly constructed or substantially (90%) renovated house used as the primary place of residence, enables the purchaser to be rebated part of the GST or HST paid in most circumstances.

I always recommend when it comes to paying taxes you should consult the CRA and a qualified tax consultant as I do not intend to represent this article as giving financial or tax advice.  By all means contact a CPA, CMA or CGA or the person working at the local mall helping to file tax returns. Base your decision on how complex your needs are.  If you don’t have someone currently doing your taxes you may want to contact a very experienced tax professional.

By Todd Lee

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References:

Expenses you can deduct http://www.cra-arc.gc.ca/tx/bsnss/tpcs/rntl/bt/rprt/xpns/menu-eng.html

Work space in the home expenses http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/229/slry/wrkspc-eng.html

Business use of home expenses  http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/rprtng/t2125/ln9945-eng.html

First Time Home Buyers Tax Credit  http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhbtc-eng.html#q1

Building, Purchasing and Selling new Houses Building, purchasing and selling new houses http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/cnstrctn/bldngsllnghms-eng.html

Ontario Energy and Property Tax Credit  http://www.fin.gov.on.ca/en/credit/oeptc/index.html

Ontario Trillium Benefit  http://www.fin.gov.on.ca/en/credit/otb/index.html

Healthy Homes Renovation Tax Credit  https://www.ontario.ca/taxes-and-benefits/healthy-homes-renovation-tax-credit

GST/HST New Housing Rebate (Seek advice directly from CRA authorities)GST/HST New Housing Rebate http://www.servicecanada.gc.ca/eng/goc/gst_new_housing.shtml


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