Tax Deductions For Homeowners Canada

Is mortgage interest tax-deductible in Canada?

Generally, mortgage interest cannot be claimed as a tax deduction since it is not subject to GST or HST. However,  if an individual borrows against home equity to purchase income-producing investments (for example, purchasing stocks) then the interest paid on that loan can now be claim as a tax deductible. Therefore, creating savings or additional cash flow the homeowner.

Source:

https://www.canada.ca/en/financial-consumer-agency/services/mortgages/borrow-home-equity.html

 

What can I write off as a homeowner?

 

Below are the different tax deductions a homeowner in Canada may be able to claim:

Home Buyer’s Plan (HBP)

The Home Buyers’ Plan (HBP) is a program that allows you to withdraw from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability.

 

Certain conditions must be met in order to be eligible to participate in the HBP, including the following:

  • you must be considered a first-time home-buyer
  • you must have a written agreement to buy or build a qualifying home, either for yourself or for a related person with a disability
  • you must be a resident of Canada when you withdraw funds from your RRSPs under the HBP and up to the time a qualifying home is bought or built
  • You must intend to occupy the qualifying home as your principal place of residence within one year after buying or building it. If you buy or build a qualifying home for a related person with a disability, or help a related person with a disability to buy or build a qualifying home, you must intend that that person occupies the qualifying home as his or her principal place of residence
  • In all cases, if you have previously participated in the HBP, you may be able to do so again if your repayable HBP balance on January 1st of the year of the withdrawal is zero and you meet all the other HBP eligibility conditions.

 

Source:https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan.html

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan/participate-home-buyers-plan.html

 

Rental Income

If you are renting out your property and generating rental income, then you may deduct any reasonable expenses that you incur to earn rental income.

The two basic types of expenses are current expenses and capital expenses. A current expense is one that generally reoccurs after a short period while a capital expense generally gives a lasting benefit or advantage.

The following is a list of expenses that are deductible:

  • Advertising
  • Insurance
  • Management and administration fees
  • Office expenses
  • Prepaid expenses
  • Professional fees (includes legal and accounting fees)
  • Property taxes
  • Repairs and maintenance
  • Salaries, wages, and benefits (including employer’s contributions)
  • Travel
  • Utilities
  • Interest and bank charges
  • Motor vehicle expenses
  • Other rental expenses

 

Source: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/rental-income-line-126-net-line-160-gross.html

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/completing-form-t776-statement-real-estate-rentals.html

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/completing-form-t776-statement-real-estate-rentals/rental-expenses-you-deduct.html

 

Moving Expenses

Generally, you can claim moving expenses you paid in the year if both of the following apply:

  • you moved to work or to run a business, or you moved to study courses as a full-time student enrolled in a post-secondary program at a university, a college, or another educational institution
  • you moved at least 40 kilometres closer to your new work or school

 

Source: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-219-moving-expenses.html

 

Work-space-in-the-home expenses

 

You can deduct expenses you paid in 2019 for the employment use of a workspace in your home, as long as you meet one of the following conditions:

  • The workspace is where you mainly (more than 50% of the time) do your work.
  • You use the workspace only to earn your employment income. You also have to use it on a regular and continuous basis for meeting clients, customers, or other people in the course of your employment duties.

 

You can deduct the part of your costs that relates to your workspace, such as the cost of electricity, heating, maintenance, property taxes, and home insurance. However, you cannot deduct mortgage interest or capital cost allowance.

 

Source: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-229-other-employment-expenses/commission-employees/work-space-home-expenses.html

 

Can you deduct property taxes in Canada?

 

Yes. You can deduct property tax assessed by a province or territory and by a Canadian municipality that relate to your rental property for the period when it was available for rent.

 

Sources: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/completing-form-t776-statement-real-estate-rentals/rental-expenses-you-deduct/line-9180-property-taxes.html

 

Is there a tax credit for homeowners?

 

Yes. Below are the different tax credits a homeowner in Canada may be able to claim:

Homebuyers’ amount

A homeowner can claim $5,000 for the purchase of a qualifying home in the year if both of the following apply:

  • you or your spouse or common-law partner acquired a qualifying home
  • you did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years (first-time home buyer)

 

A qualifying home must be registered in your or your spouse’s or common-law partner’s name in accordance with the applicable land registration system and it must be located in Canada. It includes existing homes and homes under construction.

 

Sources: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-369-home-buyers-amount.html

 

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-369-home-buyers-amount/qualifying-home.html

GST/HST new housing rebate

A homeowner may be eligible for a new housing rebate for some of the GST/HST paid if he/she is an individual who:

  • purchased new housing or constructed or substantially renovated housing, which could include housing on leased land (if the lease is for at least 20 years or gives you the option to buy the land), for use as your (or your relation’s) primary place of residence
  • purchased shares in a co-operative housing (co-op) complex for the purpose of using a unit in the co-op for use as your (or your relation’s) primary place of residence
  • constructed or substantially renovated your own home, or hired someone else to construct or substantially renovate your home for use as your (or your relation’s) primary place of residence and the fair market value of the house when the construction is substantially completed is less than $450,000

The GST/HST new housing rebate allows an individual to recover some of the goods and services tax (GST) or the federal part of the harmonized sales tax (HST) paid for a new or substantially renovated house that is for use as the individual’s, or their relation’s, primary place of residence, when all of the other conditions are met.

Source:https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/charge-collect-home-construction/new-housing-rebate.html

 

Home Accessibility Tax Credit (HATC)

Renovations or expenses incurred which make homes safer or more accessible for Canadians 65-years of age or older or for the disabled may qualify for the HATC provided they are being claimed by the eligible individual or by someone who looks after the individual and meets all of the CRA’s requirements.  Up to $10,000 in expenses can be claimed under the HATC.

A qualifying renovation is a renovation or alteration that is of an enduring nature and is integral to the eligible dwelling (including the land that forms part of the eligible dwelling). The renovation must:

  • allow the qualifying individual to gain access to, or to be mobile or functional within, the dwelling
  • reduce the risk of harm to the qualifying individual within the dwelling or in gaining access to the dwelling

An item you buy that will not become a permanent part of your dwelling is generally not eligible.

 

Source:https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-398-home-accessibility-expenses.html

 

Medical Expenses Tax Credit

The medical expense tax credit is a non-refundable tax credit that you can use to reduce the tax that you paid or may have to pay. If you paid for healthcare expenses, you may be able to claim them as eligible medical expenses on your income tax and benefit return.

Fees related to the changes made to a home that you can claim as medical expenses:

Driveway access – reasonable amounts paid to alter the driveway of the main place of residence of a person who has a severe and prolonged mobility impairment, to ease access to a bus.

Furnace – the amount paid for an electric or sealed combustion furnace bought to replace a furnace that is neither of these, where the replacement is necessary because of a person’s severe chronic respiratory ailment or immune system disorder – prescription needed.

Renovation or construction expenses – the amounts paid for changes that give a person access to (or greater mobility or functioning within) their home because they have a severe and prolonged mobility impairment or lack normal physical development.

Sources:https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/lines-330-331-eligible-medical-expenses-you-claim-on-your-tax-return.html

 

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4065/medical-expenses-2016.html#cnstrctn