Purchasing your very first home can be one of the most exciting and overwhelming experiences of your life. This occasion typically comes with lots of questions and uncertainties. One of the biggest questions is around the issue of affordability and how to gather enough money to take the plunge into home ownership.
One of the things that relieves some pressure with home buying is government funded programs and incentives. There are incentives for first time home buyers, tax credits, home upgrade rebates and several other programs.
For first time buyers, having some knowledge of how the First-Time Home Buyers Tax Credit works can be very advantageous. Let's take a look at it and see if it can be helpful for you.
What Is The Home Buyers Tax Credit?
The first time home buyers tax credit is a government funded program that allows eligible first-time home buyers to claim a non-refundable $5000 tax credit. This tax credit typically amounts to a rebate of $750.
Who Is Eligible for First Time Home Buyer Tax Credit?
There are several eligibility criteria when it comes to the tax credit for first time buyers.
- You must be purchasing a qualifying property registered in your name (or your partner's name). It can be a new build or an existing property. It can be a single family home, townhouse, condo, etc.
- You must be a first time home buyer. This means you or your partner have not resided in a home that you owned within the last four years.
- The home you are purchasing must be your primary residence within one year of the purchase date or construction completion date.
How The Tax Credit Works
The first time home buyers tax credit is very simple to attain. There is no application process or approval required. All you need to do is enter the amount of $5000 on Line 31270 of your income tax return. This amount can be split between you and your partner if you wish, but the total for both cannot exceed $5000. This credit turns into a $750 rebate on whatever you owe in taxes for that particular calendar year.
It's worth noting again that this rebate is non-refundable. This means that if you owe less than $750 in taxes, your amount owing will simply be zeroed out. You won't get a refund of the difference.
While a rebate of $750 might not seem like a lot compared to a $350,000 mortgage, every little bit of money coming in helps. Perhaps that's equivalent to a monthly mortgage payment or your grocery bill for the month. At any rate, it's a small win that requires almost no effort on your part other than being eligible.
There are other incentives like the first time home buyers tax credit that can be helpful for anyone looking to take on their first mortgage. Talking to a mortgage specialist is a great way to get more familiar with these opportunities. As always, don't hesitate to reach out if you have any questions. We are happy to help.