If you bought or sold your home in 2017 or plan to buy or sell a home soon, the Canada Revenue Agency (CRA) has information that may help you.
Principal Residence Exemption
Did you sell your principal residence in 2017? If so, you need to file a tax return to claim the Principal residence Exemption, which provides you an exemption from tax on any capital gain from the sale.
Since the 2016 tax year, you have to report basic information on your income tax and benefit return when you sell your home if you want to claim the full principal residence exemption. Basic information includes the date you acquired the home, the amount you sold it for and the address. A property may qualify as your principal residence for any year that you or certain family members lived in it if none of you designated another property as a principal residence for that year.
You do not have to pay tax on any capital gain when you sell your home if it was your principal residence for all the years you owned it and you did not use any part of it to earn income.
Certain exceptions apply for the sale of your principal residence, for example when you sold your old home and purchased a new home in the same year. If you used only a part of your home as your principal residence and you used the other part to earn income, your entire home may not qualify as your principal residence.
Home Buyers’ Amount
If you are a first-time home buyer who bought a home in 2017, you may be able to claim $5,000 for the Home Buyers’ Amount.
You qualify for the Home Buyers’ Amount if both of these conditions apply:
- you or your spouse or common-law partner bought a qualifying home
- you did not live in another home owned by you or your spouse or common-law partner in the year of the purchase or in any of the four preceding years
A qualifying home must be located in Canada and registered in your name, your spouse or common-law partner’s name, or in both your names.
You do not have to be a first-time home buyer if one of these two conditions applies:
- you are eligible for the Disability Tax Credit
- you acquired the home for the benefit of a related person who is eligible for the disability tax credit
Home Buyers’ Plan
You might also be eligible to participate in the Home Buyers’ Plan, a program that allows you to withdraw funds from your registered retirement savings plan to buy or build a qualifying home for yourself or for a related person with a disability. You can withdraw up to $25,000 in a calendar year and you have up to 15 years to repay the amounts you withdraw. Your first repayment starts the second year after the year you withdrew the funds from your RRSPs for the Home Buyers’ Plan.
You qualify for the Home Buyers’ Plan if these two conditions apply:
- you are a first-time home buyer
- you have a written agreement to buy or build a qualifying home for yourself
You are considered a first-time home buyer if, in the preceding four-year period, you did not live in a home that you or your current spouse or common-law partner owned.
You must intend to live in the qualifying home as your principal residence within one year after buying or building it.
Home Buyers’ Plan for persons with disabilities
You do not have to be a first-time home buyer to participate in this plan if you are eligible for the Disability Tax Credit or if you acquired the home for the benefit of a related person who is eligible for the disability tax credit. The purchase must be made to allow the person with the disability to live in a home that is more accessible or better suited to their needs.
GST/HST rebate on new homes in Canada
If you bought a newly constructed home from a builder or built your own home in 2017, you may be able to claim a new housing rebate for some of the Goods and Services Tax/Harmonized Sales Tax (GST/HST) you paid. To qualify for the rebate, the following three conditions must apply:
- the home is your primary residence
- the fair market value of home is less than $450,000
- you must either own the land or have at least a 20-year lease with an option to buy
Home accessibility expenses
If you are 65 years of age or older, eligible for the disability tax credit or making a claim for a senior or person with a disability, you may be able to claim eligible expenses paid for renovations that make your dwelling more accessible.
If you bought or sold a property in 2017 and would like more information on the rules and regulations pertaining to your tax obligations, or if you would like more information on various programs, deductions and credits that can help you and your family, contact GB Pilley & Associates Ltd., Chartered Professional Accountants at 604 926 3522.