Tax tips for first-time homebuyers

Why read this?

You are buying your first home or building your first home.

What to do

1. Use the Home Buyers’ Plan (HBP)

You’re eligible if you meet CRA’s definition of a first-time homebuyer. To qualify, you can’t have lived in a home that you, your spouse or common-law partner, owned in the last four years. In that case, you can withdraw up to $25,000 from your RRSP to buy or build a home.

When buying or building:

• Use Form T1036: Home Buyers’ Plan Request to Withdraw Funds from an RRSP to determine if you are eligible for the HBP.
  • Have the RRSP issuer complete Area Two of the form.
  • Keep the form for your records.

At tax time:

a. Report Home Buyers’ Plan RRSP withdrawals.

• Report the amount in Box 27 of your T4RSP: Statement of RRSP Income on Line 18 of Schedule 7: RRSP and PRPP Unused Contributions, Transfers and HBP and LLP Activities. Check the box on Line 19 of Schedule 7 if your address is the same as the home acquired under the HBP.

b. Report Home Buyers’ Plan RRSP repayments.

• You have 15 years, starting the year after your home purchase, to repay the amount you withdrew from your RRSP under the HBP.
• Designate RRSP contributions as HBP repayments on Line 6 of Schedule 7.
• If you don’t repay the minimum, report the difference on Line 129 of the return. CRA treats the un-repaid amounts as income, says accountant Colleen Gibb, partner at Gibb Widdis in Ancaster, Ont.

2. Claim the Home Buyers’ Amount

If you meet the criteria for the HBP, you qualify for the Home Buyers’ Amount.

• Enter $5,000 on Line 369 of Schedule 1: Federal Tax

TIP: The claim may be split between you and your spouse or common-law partner, but the total on both returns can’t exceed $5,000.

3. Claim the GST/HST New Housing Rebate

You are eligible for a rebate if:

• you bought a new or substantially renovated house, built your own home, or substantially renovated your existing home;
• the fair market value of the home and property is less than $450,000;
• you or a relation is the first person to live in the house; and
• you paid GST/HST on the purchase of the land or building materials.

You have two years from the time construction or renovation is substantially completed to claim the rebate.

a. If you built your own home, use Form GST191-WS: Construction Summary Worksheet to calculate the rebate.

• Report the rebate on Form GST191: GST/HST New Housing Rebate Application for Owner-Built Houses.
• Mail Form GST191 to CRA.

b. If you purchased a new home from a builder, use Form RC7190-WS: GST190 Calculation Worksheet to calculate the rebate, but also fill in form RC7190 for Ontario, B.C. and Nova Scotia (e.g. RC7190-ON for Ontario).

• Report the rebate on Form GST190: GST/HST New Housing Rebate Application for Houses Purchased from a Builder.
• Mail Form GST190 to CRA.

WARNING: If the builder pays or credits the GST/HST rebate to you, the builder is entitled to the rebate, says Gibb.

• Keep copies of the forms and original invoices for your records.
• It may take up to six months for CRA to send you the rebate.

TIP: B.C., Nova Scotia and Ontario offer provincial rebates.

Sources: Colleen Gibb, FCPA, FCA, Partner, Gibb Widdis, Ancaster, Ont.; CRA