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After a period of cooling off, home sales over the first months of 2024 show signs of recovery, according to the Canadian Real Estate Association. Whether you took advantage of lower purchase prices or readied your house for sale with renos – there are tax implications you may be able to take advantage of.
“As a homeowner, there are several federal and provincial tax deductions and tax credits that may be available for you to claim, depending on your situation,” advises Stefanie Ricchio, CPA, tax expert, and spokesperson for TurboTax Canada.
From first-time homebuyer incentives to repair and renovation rebates, the perks can add up.
Several provincial governments offer land transfer tax or provincial sales tax rebates for first-time buyers. Some homebuyers may be eligible for the new GST/HST New Housing Rebate if they purchased or constructed new housing or substantially renovated housing for use as their primary residence, adds Ms. Ricchio.
“The easy one that every first-time homebuyer is going to qualify for is the first-time homebuyers tax credit,” says Jason Heath, a certified financial planner and managing director of Markham, Ont.-based Objective Financial Partners Inc.
“There’s not much you need to do to qualify for that other than filing a tax return,” he says.
That tax credit allows first-time buyers to claim a non-refundable 15 per cent credit on up to $10,000 for the purchase of a qualifying home. That amounts to a $1,500 tax savings from the federal government for someone buying their first home, Ms. Ricchio explains.
The home buyers’ amount can be claimed by first-time home buyers who acquired a qualifying home and didn’t live in another home owned by themselves, their spouse or common-law partner in the year of purchase, or in any of the four preceding years, she adds.
Qualifying homes include single-family houses, townhouses, condominium units and apartments in duplexes, triplexes, fourplexes or apartment buildings.
There is also the Home Buyers’ Plan, Mr. Heath points out, which allows buyers to withdraw up to $35,000 tax-free from a registered retirement savings plan to use for a down payment on a home.
In 2023, the federal government announced a tax-free First-Time Home Savings Account (FHSA), he adds. It allows prospective first-time buyers to make tax-deductible contributions (like an RRSP) of $8,000 per year to a lifetime maximum of $40,000 and non-taxable withdrawals for a down payment (like a tax-free savings account). You will have 15 years to use the funds to purchase a home; if not, no worries, the plan can be transferred to an RRSP or withdrawn at which point it will be taxable.
Two-thirds of Canadians own their own homes, according to Statistics Canada’s Census data, and they spend more than $80 billion annually on home renovations.
“Most of the rebates these days are targeted at seniors,” Mr. Heath says. “If you are making repairs or doing renovations that make your home safer – that can include things like installing grab bars, redoing washrooms to make them more accessible, renovations that make a house safer for somebody who is 65 or older – there are both federal and provincial tax credits that are available.”
The federal Home Accessibility Tax Credit amounts to tax savings of 15 per cent on up to $20,000 in renovation costs.
Ms. Ricchio shares that homeowners can look forward to a new tax credit which was just created to help families afford to renovate their space for an elder with a disability to live with them. The Multigenerational Home Renovation Tax Credit will be worth 15 per cent of expenses paid up to $50,000 for a maximum credit of $7,500 as of 2023.
There are also tax credits related to environment retrofits such as home insulation, windows, doors, and heat pumps, Mr. Heath points out. “Things like that will qualify potentially for the Canada Greener Homes Initiative,” he says.
Taxpayers who own cottages or rental properties aside from their principal residence may also be eligible for certain tax deductions for renovations or repairs when the work is done or when they sell the property, which can reduce the capital gains tax on the rental income, he adds. New for 2024, the government has implemented rules surrounding short-term rentals and eligibility to claim deductions against rental income. If your short-term rental is not in a pre-designated or approved municipality, you could be reassessed and your expenses deductions disqualified, which will increase your taxable income and tax owing. Be sure to confirm if you are offering your short-term rental in an approved municipality.
There are also eligible expenses for homeowners and renters who work from home. “The amount and categories of expenses that you are permitted to claim corresponds to the percentage of the home used for work as well as whether you are an employee working from home or are completely self-employed running your own business,” Ms. Ricchio explains.
Those expenses could include utilities such as heating, water and electricity, insurance, home maintenance costs, internet and home security.
TurboTax offers a wide range of innovative tax solutions that help homeowners file their taxes with confidence that they’re getting the best possible tax outcome, Ms. Ricchio says, whether they prepare their returns themselves or meet with TurboTax experts who will get their taxes done right.
“TurboTax has the tax knowledge, understanding and experience to provide the tax solution to help homeowners find every deduction and credit they qualify for, so they can get every dollar back this tax season,” Ms. Ricchio adds.
“No matter your tax situation, TurboTax has you covered every step of the way.”
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Advertising feature produced by Globe Content Studio with Intuit. The Globe’s editorial department was not involved.