Tax Tip - Here are the keys to unlocking housing-related tax savings this filing season!

OTTAWA, ON, Jan. 10, 2025 /CNW/ - Whether you're a homeowner, are saving for your first home, or just bought your first home, there are tax incentives you should know about. These incentives could help you reduce housing costs and maximize your savings. The Canada Revenue Agency (CRA) is here to make sure you have the information you need to take advantage of them. 

Filing your income tax and benefit return is the first step to accessing any benefit or credit payments, or deductions you may be eligible for. When you do file your tax return, here are some housing initiatives to keep in mind that could put money in your pocket.

Are you saving for your first home? 

Home buyer's plan (HBP): Under the enhanced HBP, you could withdraw up to $60,000 tax-free from your Registered Retirement Savings Plans (RRSPs) to buy or build a qualifying home.

• Withdrawals made between January 1, 2022, and December 31, 2025, benefit from an additional three years to the grace period. This means the repayment period would start the fifth year following the year in which a first withdrawal was made.
• Both you and your spouse/common law partner can participate in the HBP for the same qualifying home. 

First home savings account (FHSA): Save for your first home tax-free with the FHSA. 

• You can contribute, or transfer from your RRSPs to your FHSAs, up to $8,000 per year, with a lifetime limit of $40,000.
• Contributions made to your FHSAs, including unused FHSA contributions from 2023, may be deductible on your 2024 tax return. If you opened your first FHSA in 2024, you can claim up to $8,000 in FHSA contributions you made by December 31, 2024.
• Unused FHSA participation room may be carried forward to future years.

You can withdraw amounts from your RRSPs under the HBP and make a qualifying withdrawal from your FHSAs for the same qualifying home, as long as all the conditions are met at the time of each withdrawal. 

Did you buy a home in 2024? 

Home buyers' amount: If you are eligible for the home buyer's amount, you could claim up to $10,000 for a tax credit of up to $1,500. This amount can be split with a spouse or common-law partner, but the total cannot be more than $10,000. You may be eligible to claim the home buyer's amount if:

• you (or your spouse/common-law partner) bought your first qualifying home in 2024, and you (or your spouse/common-law partner) did not own another home inside or outside Canada in 2024, or any of the four previous years.
• you are eligible for the disability tax credit (DTC), or you acquired a home for a related person who is eligible for the DTC.

Did you upgrade your home in 2024? 

Home accessibility tax credit (HATC): Homeowners aged 65 and older, or those eligible for the DTC can claim up to $20,000 in qualifying home renovation expenses for a tax credit of up to $3,000.

• These renovations must either allow a qualifying individual to gain access to the dwelling or reduce the risk of harm within the dwelling.

Multigenerational home renovation tax credit (MHRTC): If you are eligible, you could claim this refundable tax credit for certain renovation expenses to create a self-contained secondary unit, which allows a senior, or an adult who is eligible for the DTC, to live with a qualifying relation. 

• Eligible individuals can claim up to $7,500, calculated as 15% of qualifying expenditures up to a maximum of $50,000 per renovation. 

GST/HST new housing rebate: You may be eligible to claim a rebate of some of the goods and services tax/harmonized sales tax (GST/HST) paid if any of the following applies: 

• You bought a newly built or substantially renovated home from a builder for use as your (or your relation's) primary place of residence.
• You bought shares in a cooperative housing corporation for the purpose of using a unit in a new or substantially renovated cooperative housing complex as your (or your relation's) primary place of residence.
• You, or someone you hired, constructed or substantially renovated your home, for use as your (or your relation's) primary place of residence.

Did you sell your home in 2024? 

Principal residence exemption: When you sell your principal residence (or are considered to have sold it), you may be eligible to claim the principal residence exemption. This can eliminate or reduce the tax on the capital gain from the sale. 

• You must make sure you report the disposition and designate the property as your principal residence on your tax return to take advantage of this exemption. 

Residential property flipping rule: If you sell a property you owned for less than 365 days and you do not qualify for a life event exception, as listed on the disposing of your principal residence page, any profit from the sale will be taxed as ordinary business income instead of capital gains. For more information about flipped property and life event exceptions, go to T4037 capital gains 2024.

Other tax measures you should know about 

Purpose-built rental housing (PBRH): If you own or invest in purpose-built rental housing, there are potential tax incentives available to help offset costs associated with creating rental units. This encourages the development of long-term rental housing across Canada.

• The PBRH rebate is an enhancement of the GST/HST new residential rental property rebate. It supports the construction of new apartment buildings, student housing, and seniors' residences designed for long-term residential rental.
• You or your business can be eligible to claim the PBRH rebate if your new residential rental project is an eligible property.

Underused housing tax (UHT): A 1% federal tax on vacant or underused housing that generally applies to foreign national owners of housing in Canada but may also apply to some Canadian owners. The CRA has published an online self-assessment tool that provides owners with the information they need to determine if they need to file a return or if they may qualify for an exemption from paying the UHT. 

Accommodation sharing: If you earn income through platforms like Airbnb, FlipKey, VRBO, or Facebook Marketplace, you should be aware of your tax obligations to report income and expenses. As of January 1, 2024, short-term rental owners must be compliant with operating, licensing, registration, and permit requirements in the location (i.e. municipality and province) where their short-term rental is. 

• A short-term rental means a residential property that is rented or offered for rent for a period of less than 90 consecutive days.
• A residential property means all or any part of a house, apartment, condominium unit, cottage, mobile home, trailer, houseboat or other property, located in Canada, which is permitted to be used for residential purposes under applicable law. 

If you operate a non-compliant short-term rental, you will not be able to deduct expenses related to your rental. This change applies to all expenses, including interest expenses, incurred after 2023, while operating a non-compliant short-term rental. For more information about the new rules relating to non-compliant short term rentals, visit canada.ca/rental-income.

The CRA encourages all Canadians to explore these opportunities and make the most of the support available. By understanding and using these tax measures, you can better manage your housing costs through every stage of homeownership and housing-related decisions.

For more information on these housing measures, visit canada.ca/housing-cra.

Contacts:

Media Relations
Canada Revenue Agency
613-948-8366
cra-arc.media@cra-arc.gc.ca

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SOURCE Canada Revenue Agency