First-Time Homebuyer Tax Credit in Canada

The government of Canada allows first-time homebuyers to claim a tax credit. It’s based on the amount spent on buying the home.

Eligibility of Home Buyers’ tax credit 

For eligibility, a home buyer has to meet the following criteria:

  • Firstly, buy a qualified home – an existing house or be under construction. It should be registered in your name. Or, the registration may appear in a spouse or a valid party in law. It can be 
  • Secondly, you must be a first-time owner of the property. You must not be the owner for the past 4 running years. And the same applies to the partner – with whom you qualify to claim the tax credit.
  • Thirdly, the qualifying property has to be your main home for the next year after purchase or construction.

The above notes on eligibility allow special consideration for persons with disabilities. They can apply for a tax deduction even if they may not be the first-time owners of the home.

Numbers for First-Time Homebuyer Tax Credit in Canada

First-time owners of homes are eligible to claim tax credits that are non-refundable and not exceeding $750. 

HBTC or homeowners tax credit is arrived at by calculating as follows:

  • Multiply the upper limit allowable purchase value of $5,000 by the personal income tax rate of the lowest band (15% for 2022).
  • When filing taxes, add $5,000 on Line 31270 of the income return form.

Qualifying Homes

Qualifying property verification must tally with the names of the land registration systems in Canada. And same applies to partners or spouses.

Types of qualifying homes:

  • single-family house
  • semi-detached house
  • townhouse
  • mobile home
  • condominium unit
  • An apartment in duplex, triplex, fourplex, or apartment properties

Conclusions and Special Ownership Categories FOR First-Time Homebuyer Tax Credit in Canada

Shares in cooperative housing cooperations also qualify for tax credit. But, the underlying homes/ properties must be in Canada.

However, the individual house/property does not qualify for the tax credits if the share only allows you tenancy rights.

Buyers must have the intention to occupy the home as the principal residence within a year after acquisition. And the same applies to a person with a disability.