The First-Time Home Buyers’ Tax Credit (HBTC) is designed to reduce the federal tax payable for first-time home buyers.
You and your spouse or common-law partner can both claim a portion of this credit provided you meet the following requirements:
- The qualifying home is registered in your name (and in your spouse’s name, if applicable) and located in Canada
- You did not live in another home owned by you or your spouse in the year of purchase or in the previous four years
- You occupy the home no later than one year after you buy it as your principal residence
A qualifying home can be any of the following:
- Single-family houses
- Semi-detached houses
- Mobile homes
- Condominium units and
- Apartments in duplexes, triplexes, fourplexes, or apartment buildings
The combined amount that can be claimed by all owners of the home cannot be more than $5,000; this results in a maximum credit of $750 (calculated by multiplying $5,000 by 15% (the lowest personal tax rate)).
Example: Suppose John and Katie purchased and took possession of a qualifying home in 2016, and they both wished to claim an equal amount of the First-Time Home Buyers’ Tax Credit on their return. The maximum amount either of them can enter into the designated field of their returns would be $2,500 as demonstrated below:
$2,500 x 15% = $375
Total credit = $750
$2,500 x 15% = $375
Tax Tip: You don’t always have to be a first-time buyer to claim the HBTC. If you or your spouse qualify for the disability amount, you can claim the HBTC if the home you’re moving into is better suited to meet the needs of the person with the disability. The person with the disability must occupy the home as a principal residence no later than one year after it is purchased.
Where do I claim this?
Follow these steps in H&R Block’s tax software to file your 2016 taxes:
- Under the PREPARE tab, click the OTHER icon.
- On the Special situations page, enter the credit amount you want to claim in the field next to the label, If you purchased a home in 2016 that qualifies for the home buyers’ amount, enter how much of the $5,000 credit you’d like to claim.
Note: Based on the amount you entered in the field above, H&R Block’s tax software will automatically calculate your tax credit and apply it to your return.