If you bought or sold a home last year, or are planning on buying or selling a home, there are many programs of which you should be aware.
Opportunities, Factors and Issues
If you sold your home in 2016 you can take advantage of the principal residence exemption so that you do not have to pay capital gains.
To do this, file your tax return and claim the principal residence exemption.
Starting with the 2016 tax years, you are required to report basic information to claim the principal residence exemption. This information includes:
- date of acquisition;
- proceeds of disposition/sale; and
- address
For a property to qualify as your principal residence you or specified family members must have lived in the home, at some time during the year, for the year(s) you are claiming principal residency and you must not have designated another property as a principal residence for that year.
To qualify for the full capital gains exemption, the home must have been your principal residence for all the years you owned it.
Home Buyers’ Amount
If you purchased a qualifying home in 2016 and you are a first-time home buyer, you may be able to claim $5,000 on your tax return.
To qualify, you must not have lived in a home owned by you, your spouse or common-law partner in the year that you purchased the home nor in the four preceding years.
The home must be in Canada and be either:
- an existing homes, such as single-family houses, semi-detached houses, townhouses, mobile homes, condominium units, apartments in duplexes, triplexes, fourplexes, or apartment buildings; or
- a home under construction.
It must also be registered in your and/or your spouse’s or common-law partner’s name.
Home Buyers’ Amount For Persons With Disabilities
If you are not a first-time home buyer but are eligible for the disability tax credit or the home was acquired for a related person who is eligible for the disability tax credit, you may still be eligible for the $5,000 home buyers’ credit.
Home Buyers’ Plan
If you bought a home in 2016, you may also be eligible to participate in the Home Buyers’ Plan (HBP). The HBP allows first-time home buyers to withdraw funds from their registered retirement savings plan (RRSP) to buy or build a qualifying home. The home can be either for yourself or for a relative with a disability.
Under the HBP program, you are able to withdraw up to $25,000 in a calendar year, and have up to 15 years to repay the amounts you withdrew, with repayment starting a year after you withdraw the money.
To qualify for the Home Buyers’ Plan you must have a written agreement to buy or build a qualifying home and you must intend to maintain the home as your principal residence within one year after buying or building it.
Home Buyers’ Plan For Persons With Disabilities
If you are not a first-time home buyer but are eligible for the disability tax credit or the home was acquired for a related person who is eligible for the disability tax credit, you may still be eligible for the home buyers’ plan.
It is important to note that the purchase must be made so that the disabled person lives in a home that is more accessible or better suited to their needs.
If you require assistance, organizing you estate plan, which includes an effective tax planning strategy, contact us today! We are always happy to help.
