With tax time getting closer and closer, it’s worth keeping in mind that homeowners in Canada may be eligible for several tax credits, benefits, and grants which could help you save money come April 30. Eligibility for these tax-time supports depends on whether you’re new to homeownership, whether you’ve done renovations this year, and whether you’ve made an effort to make your property greener.
What Are Tax Credits?
Income deductions lower your taxable income. Tax credits are sums of money that help you pay less tax on your taxable income. The more tax credits you qualify for, the lower your income tax. Tax credits are available from the federal, provincial, and territorial governments, which you can use to reduce your taxes.
Some tax credits are non-refundable, meaning they do not lower or cancel the amount of taxes you owe. A refundable tax credit is one that you can get even if you don’t owe any money in taxes.
Below Is the List of the Options you can Avail yourself If you Want to Get Some Tax Credits
Provincial Tax Credits & Refunds for Homeowners
Many provinces in Canada offer additional refunds and credits to homeowners, each with its laws and eligibility criteria. Each province, including Saskatchewan, B.C., Manitoba, Ontario, and New Brunswick, has tax credits, including local versions of many federal incentives. There are also a few specific to each location, so have a look and see if any of them apply to you!
GST/HST New Housing Rebate
Under some situations, you may be eligible for a tax refund on the amount you paid for a new home or building. You might earn some excellent cashback on your return if you bought a new or highly renovated home straight from a builder, bought shares in a new co-op housing development, or wholly redesigned or built your own home!
Home Buyers’ Amount
Regardless of your financial status, purchasing a new house is a significant financial investment. In addition, the Canada Revenue Agency has devised a method for Canadians who have recently purchased their first home to obtain some money back on their taxes. You can claim up to $5,000 on your taxes this year if you acquired a new home in 2021 and did not live in a dwelling owned by you (or your spouse/common-law partner) for the previous year or four years.
Home Accessibility Tax Credit
There is a particular tax credit available for people who have had to alter their homes to make them more accessible for someone with a disability or over 65. You can claim up to $10,000 in renovation expenses and receive up to 15% of the costs back on your tax refund if you use the federal home accessibility tax credit.
Provincial Home Renovation Tax Credits
It is a means for homeowners in a few Canadian provinces to obtain some money back after renovations, similar to the federal version. It’s for people who have had to alter their houses to make them more accessible and safer for seniors. This credit exists in some form in the provinces of British Columbia, New Brunswick, Ontario, and Saskatchewan. In Saskatchewan, for example, you can claim between $1,000 and $11,000 in qualified expenses, with up to 10.5 percent of the cost reimbursed.
Canada Greener Homes Grant
To assist Canadians in being more environmentally conscious, some money has been provided. This grant is non-taxable and non-repayable, and it’s intended to help you pay for the costs of making your home more environmentally friendly. A total of 700,000 awards are available, each worth up to $5,000. It’s ideal if you’ve just upgraded your home with more energy-efficient windows, insulation, or other green features.
Tax Credit for Medical Expenses
The medical costs tax credit is similar to the HATC. It allows you to claim up to a set amount to make your home accessible for yourself or eligible dependents with mobility challenges. If you qualify, you could receive a tax credit refund of up to 25% of your eligible medical expenses, up to a maximum amount established for the year.
Deductions for Rental Income
Do you have any rental properties (including farmland)? If this is the case, remember to report your rental income on your taxes. Advertisement fees, property taxes, insurance, and interest on money borrowed to buy or remodel the rental property are all permitted charges.
You might also deduct renovations to your rental property as a depreciating asset using Capital Cost Allowance (CCA). However, while you can claim the renovation expenditures in the year they’re completed, you may have to pay capital gains taxes on the value of the CCA claims if you sell the house. As a result, you’ll want to be cautious while deducting anything linked to your rental’s renovation.
To Wrap It All Up
Many deductions and tax credits are available under Canada’s tax system, allowing you to pay less tax. It’s a good idea to track down all of the tax breaks and credits that apply to you. As your family and financial circumstances change, the tax deductions and credits that apply to you will also change.
The application of tax deductions and credits is quite specific; therefore, see the General income tax and benefit package or seek professional assistance to determine how they apply to you.