Owning a home in Canada can be expensive, but the good news is that there are numerous tax incentives available to help reduce housing costs and increase your savings. Whether you’re saving for your first home, recently purchased one, or made upgrades to your property, there are several credits and deductions you should know about.
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Tax Benefits for First-Time Home Buyers
Home Buyers’ Plan (HBP)
The Home Buyers’ Plan (HBP) allows first-time buyers to withdraw up to $60,000 tax-free from their Registered Retirement Savings Plan (RRSP) to purchase or build a qualifying home.
- Withdrawals made between January 1, 2022, and December 31, 2025, qualify for a three-year grace period extension.
- Repayment begins in the fifth year following the withdrawal.
- Both partners in a couple can use the HBP for the same home.
First Home Savings Account (FHSA)
The First Home Savings Account (FHSA) helps Canadians save for their first home tax-free.
- Contribute up to $8,000 annually with a lifetime limit of $40,000.
- Contributions are tax-deductible, and unused contributions can roll over to future years.
- For 2024, Canadians can claim up to $8,000 in FHSA contributions made by December 31, 2024.
Tax Breaks for New Homeowners in 2024
Home Buyers’ Amount
If you bought your first home in 2024, you may be eligible to claim up to $10,000 for a tax credit worth up to $1,500.
- This amount can be split with your spouse or common-law partner but cannot exceed $10,000 in total.
- Eligibility criteria include being a first-time homebuyer or acquiring a home for someone eligible for the Disability Tax Credit (DTC).
Home Buyers’ Tax Credit for People with Disabilities
If you or your spouse/common-law partner is a person with disabilities, you may qualify for the Home Buyers’ Tax Credit (HBTC) even if you aren’t a first-time buyer. This credit can provide significant financial relief.
Tax Deductions for Work-Related Moves
If you moved at least 40 km closer to a new job in 2024, you can deduct your moving costs, including:
- Flights and movers
- Real estate fees and lease penalties
- Temporary housing costs
These deductions can help offset the financial burden of relocating for work.
Tax Incentives for Home Upgrades
Multigenerational Home Renovation Tax Credit (MHRTC)
If you renovated your home to create a self-contained unit for a family member, you could claim up to $50,000 in renovation expenses.
- The refundable tax credit is 15% of eligible expenses, providing up to $7,500 in savings.
Home Accessibility Tax Credit (HATC)
The HATC offers a non-refundable tax credit for eligible home renovations or alterations, with an annual expense limit of $20,000.
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GST/HST Housing Rebates
You may qualify for a rebate of some GST/HST paid if:
- You purchased a newly built or substantially renovated home.
- You constructed or renovated your home for use as your primary residence.
- You purchased shares in a cooperative housing corporation for a qualifying residence.
Tax Considerations for Selling Your Home
Principal Residence Exemption
If you sold your principal residence, you may qualify for the Principal Residence Exemption to reduce or eliminate taxes on the capital gain.
- You must report the sale and designate the property as your principal residence on your tax return.
Residential Property Flipping Rule
If you sell a property owned for less than 365 days, profits may be taxed as business income unless a qualifying life event applies.
Additional Tax Incentives
Purpose-Built Rental Housing (PBRH)
The PBRH rebate supports the creation of new rental housing such as apartment buildings, student housing, and senior residences. This rebate encourages long-term rental housing development in Canada.
Maximize Your Savings with CRA Tax Benefits
Filing your income tax return is the first step to accessing these valuable credits and benefits. Whether you’re a first-time homebuyer, upgrading your current home, or managing work-related moves, these tax incentives can help make homeownership more affordable.
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