FIRST TIME HOME BUYERS’ (FTHB) TAX CREDIT
When you purchase your first home, you are eligible for a first-time homebuyer’s credit when you file your tax return for the year you purchased your home. This credit is 15% of the first $5,000 of your home, so generally, $750. Note that this can only be claimed once per house, so if you and your spouse or common law partner purchased your home together, only one of you are able to claim this credit.
HOW TO BE ELIGIBLE
- The qualifying home must be a new or existing home located in Canada. This includes single-family houses, semi-detached houses, townhouses, mobile homes, condominium units, and apartments in duplexes, triplexes, fourplexes, or apartment buildings.
- You must have the intention of residing in the home within one year after it is acquired.
- The home must be registered in your name, or your spouse or common-law partner’s name.
- You have not lived in another home owned by you or your spouse or common-law partner in the year of acquisition, or in the past 4 years.
- You must have documentation of your purchase.
Manitoba School Tax Rebate
The Manitoba School Tax Rebate is a program available to homeowners in Manitoba to help repay you for some of the School Taxes paid to the province, which are paid with your property taxes.
To receive this rebate, you can notify City Hall that you would like them to apply it directly to your property tax bill, thus reducing the amount you owe to the City by $700. If you don’t get this done before your property tax bill is prepared, that is OK, you can still claim the rebate when completing your income tax return. This is done on the provincial portion of the tax return.
When you purchase a home in the middle of the year, this amount is prorated for the number of days you own the home during the year.
If you are a senior citizen, you may be eligible for an additional School Tax Rebate of up to $470 depending on your household income and property tax bill.
First Time Home Buyers Plan
To assist first time home buyers in coming up with a down payment, CRA has allowed a one-time tax-deferred withdrawal from a RRSP to use for a home purchase. Normally, when you make a withdrawal from a RRSP, the amount is added to your income in the year you withdraw it and you pay tax on it. Under this program, you have 15 years to repay this to back to your RRSP or add what you took out back to your income over 15 years.
You can request these funds from your RRSP by contacting the institution that holds your RRSP. Make sure to specify that you are using these for a transfer to the First Time Home Buyers plan, so they do not take a withholding tax on the transfer.
In the year you withdraw the funds and use them in the Home Buyers Plan, you will have to specify this on your tax return, otherwise, CRA will add the total amount you withdrew to your taxable income. In subsequent years, you will have to designate the amount you wish to put back to your RRSP from your home buyers plan, or the amount you would like to add to income. In the above example, where you withdrew $15,000, you would have to pay back $1,000 per year for the next 15. If you made $2,000 worth of contributions to your RRSP in the next year, you could either designate between $1,000 - $2,000 to your Home Buyer Plan payback. In general, it is better to allocate the minimum, so you still get a tax deduction for the other $1,000 contribution you made in the year.
Note that this program is only available for first-time home buyers. If you and your spouse or common law partner are purchasing a home together,