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First-Time Home Buyers’ Tax Credit (HBTC)
The First-Time Home Buyers’ Tax Credit (HBTC) is a non-refundable tax credit intended to help first time buyers cover costs associated with purchasing a home. The HBTC was introduced as part of Canada’s “Economic Action Plan” and starting in 2009, can be claimed on your personal income tax return by entering $5,000 on line 369 of your Schedule 1, Federal Tax.
The First-Time Home Buyers’ Tax Credit must be claimed in the year that the property was purchased, and the credit is non-refundable. The HBTC can be claimed individually, jointly with a spouse or common-law partner, or with a friend or family member, but the combined claim cannot exceed $5,000.
The tax credit is calculated by multiplying your lowest personal income tax rate for the year by $5,000. For example, in 2009 the lowest personal income tax rate was 15%. $5,000 multiplied by 15% equals a total credit of $750.
Do you qualify?
To qualify for the tax credit, the applicant(s):
- Must not have owned a home within the last 4 years.
- Must not have lived in a home that any co-applicants have owned within the last 4 years.
- Must register the property in the name of the applicant(s).
- Must have documents available supporting the purchase of the property should they be requested by Canada Revenue Agency (CRA).
To claim the HBTC, the property must be a ‘qualifying’ home. To qualify, the home:
- Must be located in Canada.
- Must be occupied by the applicant(s), or a relative with a disability, within 1 year of purchase.
- Must be a single-family home, semi-detached home, townhouse, mobile home, condominium, apartment, duplex, triplex, or fourplex.
Shares in co-operative housing corporations qualify if the co-op gives you the right to own the unit; those that only provide the right of tenancy do not qualify.
HBTC for people with disabilities
For those with disabilities, the applicant need not be a first-time home buyer. To qualify as a person with disabilities, one must use the same definition that is used when claiming disabilities for income tax purposes, and must claim a disability amount in the year the property was purchased, or would be eligible to claim a disability amount if the costs were ignored for attendant care, or care in a nursing home was claimed for the Medical Tax Credit.
For more information about the First-Time Home Buyers’ Tax Credit, visit one of the following government resources: