WEYBURN - It is not unusual to hear about the cost of buying a house, the cost of rent, or discussions about how to renovate existing properties for evolving needs. We know people are looking for housing options for aging parents or for a family member with a disability. You might be a senior who needs to make some modifications to your home to enhance your mobility. Or are you curious about multi-generational housing where more than one generation live under the same roof? Whatever the case, the cost of making modifications to your home is likely a factor.
Whether you are new to Canada and trying to make your way, or are a Canadian resident wondering about housing options for the future, you are likely thinking about costs. The cost of living is high and we need to find ways we can stretch our dollars to where they need to go. We all have things to learn when it comes to managing our personal finances, and even more so as life circumstances change.
In November, the CRA celebrated Financial Literacy Month by inviting organizations across Canada to come together to talk about personal finances, and how to manage different aspects of them. It is not always easy to know where we can get help to manage our money or to understand what mechanisms are out there for us. This November, help us get that conversation going.
At the Canada Revenue Agency (CRA), they want to talk to you about tax incentives. This year, like so many of us, they are thinking about housing and the tax incentives that exist to help you with your home projects. You may qualify for benefits, credits, or tax incentives administered by the CRA to adapt your home so it can be more accessible. If you do qualify, these incentives can stretch your buying power.
But first, there is something even more important to consider. Before you can qualify for one of the housing tax incentives, and other benefits and credits, you must file your income tax return. Always, the very first step is to file your income tax return. That is how you can qualify for any benefits, credits or other tax incentives like the ones for housing.
What's new for homeowners?
Here are some new and existing housing benefits and tax credits:
Multigenerational Home Renovation Tax Credit (MHRTC)
• The MHRTC could provide a valuable refundable credit for eligible expenses related to certain qualifying renovations to create a self-contained secondary unit for an individual to reside with a relation. Your clients could claim up to $50,000 in expenditures for each qualifying renovation that is completed. The tax credit is 15 per cent of your client's costs, up to a maximum of $7,500, for each eligible claim.
Existing measures for homeowners
Home Accessibility Tax Credit (HATC)
• The HATC non-refundable tax credit for eligible home renovation or alteration expenses, with an annual expense limit of $20,000.
Keeping things fair!
While we all want to learn more about how to access tax incentives, we cannot forget the importance of maintaining a fair tax system so we all have a better chance to live in a house of our choosing. To achieve this goal and create better access for more people, it is important that you understand your tax obligations when it comes to home ownership.
Here are some of the housing tax obligations you should know of:
1. Principal Residence Exemption
If you sell a house that was solely your principal residence for every year you owned it, you do not have to pay capital gain. However, in order to benefit from this exemption, you must report the sale and designate the property as your principal residence when filing your personal income tax return for the year the property was sold.
2. Underused Housing Tax
Learn about the annual 1 per cent tax on vacant or underused housing. The CRA has published a new online self-assessment tool that can help you find information about specific ownership conditions, including information about exemptions from paying the tax for which you may qualify.
3. Residential Property Flipping Rule
Learn more about the new rule introduced to ensure that profits from the disposition of flipped properties, including rental properties and assignment sales, are taxed as business income.
4. Accommodation Sharing
If you are a homeowner that earns income through online platforms related to housing and accommodations, such as AirBnB, CanadaStays, FlipKey, and VRBO, be aware of your tax obligations to stay compliant.
Whether you are a current homeowner or desire to become one, we want you to have every opportunity to use these housing tax incentives to live a life of your choosing. When you file your taxes, you can help make that a reality. This November, step into Financial Literacy Month and see how many new things you can learn about managing your finances.
For more information on the CRA's Financial Literacy Month initiatives, check out Canada.ca/housing-cra.
