Residential Real Estate Tax Breaks

Canadian governments are always looking to boost economic activity to support their re-election. In 2017, the federal government allocated over $35+ billion to infrastructure spending over an 11-year period. This represents an opportunity for all homeowners to claim their share of the subsidies by investing in their homes at a discounted rate.

You may be eligible for a new housing rebate for some of the GST/HST paid if you are an individual who:

  • purchased new housing or constructed or substantially renovated housing, which could include housing on leased land (if the lease is for at least 20 years or gives you the option to buy the land), for use as your (or your relation’s) primary place of residence

  • purchased shares in a co-operative housing (co-op) complex for the purpose of using a unit in the co-op for use as your (or your relation’s) primary place of residence

  • constructed or substantially renovated your own home, or hired someone else to construct or substantially renovate your home for use as your (or your relation’s) primary place of residence and the fair market value of the house when the construction is substantially completed is less than $450,000

The GST/HST new housing rebate allows an individual to recover some of the goods and services tax (GST) or the federal part of the harmonized sales tax (HST) paid for a new or substantially renovated house that is for use as the individual's, or their relation's, primary place of residence, when all of the other conditions are met. Additionally, other provincial new housing rebates may be available for the provincial part of the HST whether the GST/HST new housing rebate for the federal part of the HST is available or not.

In certain circumstances, a transitional new housing rebate may be available in addition to any GST/HST new housing rebate and provincial new housing rebate for which you may be eligible, even if the house is not your primary place of residence.

The new housing rebate is not available to a corporation or a partnership.

You may be entitled to claim a GST/HST new housing rebate for an owner-built house if you:

  • built, or engaged someone else to build, a house on land that you already owned or leased

  • substantially renovated, or engaged someone else to substantially renovate, your existing house (at least 90% of the interior of the existing house must be removed or replaced to be a substantial renovation)

  • renovated, or engaged someone else to renovate, your existing house and built, or engaged someone else to build, a major addition to your house that at least doubles the size of the living area of the house (for example, the addition of a full second story to an existing bungalow. Adding a sun porch, sun room, family room, or bedroom by itself is not a major addition)

  • converted a non-residential property into your house

  • purchased a new or substantially renovated mobile home or a new floating home from a builder of the home (this includes the manufacturer or vendor of the home) or you or someone you hired substantially renovated such a home. For a mobile or a floating home, you have the option of claiming either the owner-built new housing rebate or the new housing rebate for a house purchased from a builder

In most cases, there is no requirement to submit supporting documentation with your application. However, you do have to send invoices with your worksheet where the vendor did not charge the GST/HST on the invoice (photocopies of these invoices will be accepted). You also may be contacted and requested to submit proof of occupancy.

(from:https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/gst-hst-home-construction/gst-hst-new-housing-rebate.html)

What is the Home Buyers' Plan (HBP)?

The Home Buyers' Plan (HBP) is a program that allows you to withdraw up to $25,000 in a calendar year from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability.

Do you meet the HBP eligibility conditions?

You must be considered a first-time home buyer.

You must have a written agreement to buy or build a qualifying home for yourself.

Or

You must have a written agreement to buy or build a qualifying home for a related person with a disability, or to help a related person with a disability buy or build a qualifying home (obtaining a pre-approved mortgage does not satisfy this condition).

Generally, you have up to 15 years to repay to your RRSP(s)

To withdraw funds from your RRSPs under the HBP, fill out Form T1036, Home Buyers' Plan (HBP) Request to Withdraw Funds from an RRSP

(from:https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan.html)

Home renovations can certainly be costly, and if you need some financial assistance to undertake a remodeling project, there are many loan and line of credit options available to you.

  • Home equity line of credit: If you've owned your home for several years, you've built up equity by making mortgage payments. You'll enjoy low interest rates and a reusable line of credit that lets you make major purchases like flooring, new doors and windows, drywall and other new fixtures. Plus, you can take out money on your line of credit from your debit card, bank machine, online and more.

  • Personal loan: If you have limited equity available, you might consider a personal loan. The funds can be used for anything, including home improvements. You can choose your preferred repayment plan as well as whether you'd like a variable or fixed interest rate. You can also secure your loan, and benefit from a lower interest rate and a higher credit limit.

  • Personal line of credit: On the other hand, you may prefer a reusable line of credit to make home improvements. After all, remodeling can be an ongoing process. With a line of credit, you can borrow and repay the funds as you need them. Once you apply, you don't have to reapply.

(from: CIBC website)

**Some of the information in the following post may be inaccurate or outdated. We are not responsible for any actions undertaken as a result of this information or the damages/costs that may be incurred. Please visit official sources before taking any actions relating to the information found above.