As of January 27, 2009, first-time home buyers may be eligible for an income tax credit for their closing costs. However, “first-time home buyer” can be misleading. Please consider the following:
WHO: An individual is considered a First-Time Home Buyer if neither the buyer, or his/her spouse or common law partner owned and lived in another home in the calendar year of the home purchase, or in any of the four preceding calendar years.
WHAT: The First-Time Home Buyer Tax Credit provides a credit on a maximum of $5000 for home purchase costs (including legal fees, land transfer taxes etc), meaning maximum tax relief of $750. The individual/couple MUST intend to occupy the property within one year of the purchase to receive the credit, meaning it does not apply to properties purchased as investments.
WHEN: The First-Time Home Buyer Credit is claimable for that taxation year in which the home is acquired.
WHERE: The First-Time Home Buyer Credit applies to properties purchased within Canada only.
WHY: The First-Time Home Buyer’s Credit was originally introduced as part of “Canada’s Economic Action Plan” to assist.
For more information, contact Service Canada at 1-800-662-6232.