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Tax tips for first-time homebuyers

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Why read this?

You are buying your first home or building your first home.

What to do

1. Use the Home Buyers’ Plan (HBP)

You’re eligible if you meet CRA’s definition of a first-time homebuyer. To qualify, you can’t have lived in a home that you, your spouse or common-law partner, owned in the last four years. In that case, you can withdraw up to $25,000 from your RRSP to buy or build a home.

When buying or building:

At tax time:

a. Report Home Buyers’ Plan RRSP withdrawals.

b. Report Home Buyers’ Plan RRSP repayments.

  • You have 15 years, starting the year after your home purchase, to repay the amount you withdrew from your RRSP under the HBP.
  • Designate RRSP contributions as HBP repayments on Line 6 of Schedule 7.
  • If you don’t repay the minimum, report the difference on Line 129 of the return. CRA treats the un-repaid amounts as income, says accountant Colleen Gibb, partner at Gibb Widdis in Ancaster, Ont.

2. Claim the Home Buyers’ Amount

If you meet the criteria for the HBP, you qualify for the Home Buyers’ Amount.

TIP: The claim may be split between you and your spouse or common-law partner, but the total on both returns can’t exceed $5,000.

3. Claim the GST/HST New Housing Rebate

You are eligible for a rebate if:

  • you bought a new or substantially renovated house, built your own home, or substantially renovated your existing home;
  • the fair market value of the home and property is less than $450,000;
  • you or a relation is the first person to live in the house; and
  • you paid GST/HST on the purchase of the land or building materials.

You have two years from the time construction or renovation is substantially completed to claim the rebate.

a. If you built your own home, use Form GST191-WS: Construction Summary Worksheet to calculate the rebate.

b. If you purchased a new home from a builder, use Form RC7190-WS: GST190 Calculation Worksheet to calculate the rebate, but also fill in form RC7190 for Ontario, B.C. and Nova Scotia (e.g. RC7190-ON for Ontario).

WARNING: If the builder pays or credits the GST/HST rebate to you, the builder is entitled to the rebate, says Gibb.

  • Keep copies of the forms and original invoices for your records.
  • It may take up to six months for CRA to send you the rebate.

TIP: B.C., Nova Scotia  and Ontario offer provincial rebates.

Sources: Colleen Gibb, FCPA, FCA, Partner, Gibb Widdis, Ancaster, Ont.; CRA

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