With tax deadlines approaching, many of us will spend the next few weeks scrambling to pull together the forms, receipts and whatever other relevant documentation. This can be a stressful time of year, but for homeowners – especially new ones – it can bring some good news, too.
Get a move on
There are plenty of home-related expenses available to claim, with moving expenses among the most generally available. If you’ve moved to be closer to work or school – and the shift was 40 kilometres or more – then you can claim the cost of the move. For example, moving from Langley to Vancouver or Kelowna to Metro Vancouver will qualify.
If you’re self-employed and use a portion of your residence as an office, then you can claim a proportion of utilities, strata fees, mortgage expenses and home insurance as business expenses. This can help make sense of a home purchase, in addition to the fact that you’re building equity, rather than shelling out money on rent.
Saving is prudent at the best of times, but for first-time homebuyers, there’s a double value in using tools such as an RRSP (Registered Retirement Savings Plan). On the one hand, contributions to an RRSP diminish your taxable income directly; contributions aren’t taxed until they’re withdrawn, so they’re helpful for deferring tax payments while saving for retirement. On the other hand, first-time homebuyers can withdraw up to $25,000 in a single calendar year to assist with purchasing or building a qualifying residence. If you're purchasing with someone who is also a first-time homebuyer, you can both access $25,000 from your RRSP for a combined total of $50,000. This withdrawal is tax-free, so long as it’s repaid within the required timeframe.
This means if you save up some money, you can reduce your annual tax burden and then apply some of the cash against your first residence – that’s up to five percent of a $500,000 property.
The Canada Revenue Agency allows individuals to claim a variety of medical expenses against income, but there’s good news for ageing homeowners: modifications to enhance accessibility and safety can be claimed through the Home Accessibility Tax Credit. If you’re eligible to claim the disability tax credit or are 65 years of age or older – and you need to make changes to accommodate your disability or other health issues – then this tax credit is for you.
In addition, from time to time government programs offer various credits for retrofits and renovations to make homes more energy efficient and environmentally friendly.
Delay the day
If you’re self-employed, this year you have until June 17 to file (the deadline is normally June 15, but that falls on a Saturday this year). That gives us two extra days to figure everything out. Remember, though, that if you owe taxes, you still need to pay up by April 30
Being wise to the deductions and credits available to you – or having an accountant who pays attention – can make tax time less taxing and help you plan your future.