Increase in First-time Home Buyers' Tax Credit

The First-time Home Buyers' Tax Credit (HBTC) was enacted in 2009 by the Federal governement to assist first-time home buyers with a non-refundable tax credit in the amount of $5,000 ($10,000, 2022 tax year onward) for the purchase of a qualifying home. In light of rising home prices in the past few years due to the over-heated Canadian real-estate market which has made home ownership unaffordable for many Canadians, the Government made the decision to increase the HBTC to $10,000 in its 2022 Budget.

The credit can only be claimed in the tax year when the qualifying home was acquired and can not be carried forward to future years. A qualifying home must fall under one of the following categories:

Single-family house	Apartments (duplex,tri/fourplexes)
Semi-detached house	Condominiums
Townhouses	Mobile homes

A share in a cooperative housing corporation which entitles the individual to an equity share in a housing unit also qualifies for the program, but if the share is only for the right to tenancy, it will be disallowed. The home must be located in Canada and legally registered under the name of the individual claiming the credit, and/or their spouse or common-law partner. The home can be an existing home or under construction.

To qualify for the credit, you must also be a first-time home buyer which means you and/or your spouse or common-law partner did not own a qualifying home in the past four years. There are exemptions to the first-time home buyer rule if you fall under one of these categories:

You are eligible for the Disability Tax Credit (DTC), or

If you purchased a qualifying home which has improved accessibility for a relative with DTC. The credit can only be claimed by the individual eligible for the Disability Tax Credit. You and the individual with disability must occupy the residence no later than one-year after purchase.

As explained earlier, First-time Home Buyers' Tax Credit (HBTC) is a non-refundable tax credit which reduces taxes payable to zero. In simple words, it will not be refunded to you if you had no income and did not owe any amounts in taxes. HBTC amount is reported on line 31270 of the income tax return (T1) and taxed at the lowest tax bracket of 15% or $1,500 ($10,000 x 15%). In the event an individual owes less than $1,500 in taxes, HBTC will only reduce the tax payable to zero. Similar to all other years, you can split the HBTC with your spouse or common-law partner ($5,000 each) as long as the total amount does not exceed the total allowable amount of $10,000.

For further information please contact Softron at 1-877-SOFTRON or visit www.softrontax.com