The federal government introduced the First-time Home Buyers’ Tax Credit (HBTC) to help Canadians with the purchase of their first home. The $5,000 non-refundable tax credit applies to qualifying homes purchased after January 27, 2009, and provides up to $750 in federal tax relief.
How is it calculated? The HBTC is calculated by multiplying the lowest personal income tax rate for the year (15% in 2009) by $5,000. For 2009, the credit is $750.
Who is eligible? First-time home buyers are eligible to receive the HBTC. To be considered a first-time home buyer, neither the individual nor the individual’s spouse or common-law partner will have owned and lived in another home in another home in the year of the home purchase or in any of the preceding calendar years. Special consideration is given for the purchase of a home that is more accessible to the needs of an individual who is eligible for the Disability Tax Credit. In this situation, the HBTC can be claimed even if the individual is not a first-time home buyer.
Which properties qualify? Any housing unit located in Canada that will be occupied by an individual and/or individual’s common-law partner or spouse as the principal place of residence no later than one year after its acquisition.
How does it work? First-time home buyers purchasing a home may claim the HBTC on their income tax returns starting with the 2009 taxation year. Claimants will be responsible for providing supporting documentation of the purchase transaction if requested by the Canada Revenue Agency. It is the responsibility of the claimants to ensure all applicable eligibility conditions are met.
Any unused portion of an individual’s HBTC may be claimed by the individual’s spouse or common-law partner. When two or more eligible individuals purchase a home together, the total credit amount may be shared but cannot exceed $5,000.
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