Tax season is upon us, and you are probably checking to make sure you are taking advantage of every tax break you can. Here is a cheat sheet to remind you of all the tax deductions you can use:
Image: Alan Cleaver / Flickr
1. First Time Home Buyers
If you bought your home last year, and it was your first, the Home Buyer’s Tax Credit might be something you are eligible for. The tax credit applies to any home that was bought after Jan. 27, 2009, and can give you a tax credit of 15% to any amount up to $5,000. This works out to a tax refund of $750. And, as mentioned, you can’t have owned a home before this one – and your spouse can’t either. If you have any further questions about this tax deductions or any of the other ones mentioned, check out Revenue Canada’s site.
2. RRSPs
To further encourage first-time home buyers, the Home Buyers’ Plan lets buyers take out $25,000 from their RRSPs to put toward their home purchase without paying tax on the withdrawn amount. You can use it for buying a home or building a home, or for buying a home for someone with a disability. You can then repay the withdrawn amounts over the next fifteen years.
3. Home Renovations Tax Credit
We’ve mentioned this Tax Credit plenty of times on Realty Kitchen: this tax credit applied to any renovations you might have made between the end of January 2009 and January of this year. Like the home buyers’ tax credit, this tax credit will be 15% of any renovation expenses between $1,000 and $10,000. So the max you can claim is $1,350. This was one of the government’s most popular tax measures last year, so double check your tax receipts to see if you qualify.
4. Home offices
If you have a home office, you can deduct some of the expenses related to maintaining your property from your taxes. For instance, you can deduct mortgage interest, property taxes, utilities, home insurance and the cost of maintenance. However, you will have to be reasonable. A good rule of thumb is to divide the area your office takes up by the total space in your home.
5. Zero tax on home sales
If you’ve sold your home in the last year, you may not even think of it as a tax break, but it is: the amount of money you made on your home is not seen as capital, and therefore it isn’t taxed.
Nelson Goulart
Broker of Record with Signature Service GMAC Real Estate
www.ssgmac.ca
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