Buying your first home can be intimidating, even in the best circumstances. But, of course, buying the house is only the beginning; the additional fees you’ll have to pay during the closing process can quickly add up. Inspection fees, legal fees, and land transfer taxes are just a few of the closing costs. Unfortunately, this can make buying a home for the first time seem increasingly out of reach.
If you’re starting to save up to become a first-time homebuyer, a few government programs can help to reduce your burden. We are talking about today, First-Time Home Buyers’ Tax Credit, a small rebate that could offset some expenses. Let us show you how you can receive a First Time Home Buyer Tax Credit.
Read through the guide, and you will know all about it, as we have summed it all up for you.
What is the First-Time Home Buyers’ Tax Credit (HBTC)?
First-Time Home Buyers’ Tax Credit is available for home purchases up to $5,000 and is known as the Home Buyers’ Amount or the Home Buyers’ Tax Credit. The total tax rebate amounts to $750. Existing and under-construction homes in Manitoba meet the criteria as qualifying homes. Houses like single-family homes, semi-detached houses, townhouses, condo units, mobile homes, and other structures are qualified for the first home buyer’s tax credit. Now, a proposal has been suggested for 2022 and subsequent taxation years to increase the amount for the calculation of the First Time Home Buyer Tax Credit in Manitoba to 10 thousand dollars so that it can provide tax credits up to $1500 for eligible home buyers. But until the proposal gets approval, the current rules will be in effect.
Does My Home Qualify for First-Time Home Buyers’ Tax Credit for Manitoba?
The vast majority of Manitoban homes are usually eligible for the First-Time Home Buyers’ Tax Credit by fulfilling certain conditions that should be kept in mind. The house qualifies if-
- If the home is a townhouse, semidetached, single-family, mobile home, or condo.
- If it is an existing or new construction home in Manitoba;
- The owner must be moved into the house within one year.
- The home may qualify if it is listed under the first-time buyer’s or partner’s name and registered as their primary residence.
Note that housing units that share and provide a right to tenancy won’t qualify for HBTC. Only shares that ensure possession of the unit qualify.
How Does First-Time Home Buyers’ Tax Credit for Manitoba Work?
Claiming the first-time home buyers’ tax credit in Manitoba is very straightforward. There is no need to apply or be approved.
To claim your $5,000 home buyer credit, enter it on Line 31270 of your income tax return. The government allows you to split the amount with the spouse or common-law partner, but the total claims cannot exceed $5,000. The credit results in a $750 reimbursement on the taxes owed for the year (The amount is calculated using the lowest personal tax rate, which is currently 15%).
If the owed tax is less than $750 for the year, they can only reduce the taxes to $0; the homeowner will not receive an additional refund because this is a non-refundable tax. So, just in case, it’s best to keep all the home buying documentation in any case if CRA requires proof of eligibility for the credit.
How Much Benefitted Can I be From First Time Home Buyer Tax Credit Manitoba?
The credit provides up to $750 in federal tax relief. It’s not much, but it can help cover minor expenses like inspection fees, legal fees, and land transfer taxes. Unfortunately, the credit is non-refundable, so to remind you again, if you owe less than $750 in taxes, you will not receive the remaining amount in cash.
How To Claim First-Time Home Buyers’ Tax Credit for Manitoba?
Applying for the First Time Home Buyer Tax Credit Manitoba is simple. While using online tax software like Wealth Simple Tax or Turbotax, answer ‘yes’ when asked if the house was bought for the first time this tax year. The CRA homebuyers’ amount must be entered on Line 31270 of your Schedule 1 (previously line 369 on your income tax return) with $5,000. That’s it. The CRA will handle the rest.
How Do You Claim Credit for People With Disabilities?
If someone has a disability and claims the Disability Tax Credit on the tax return, they are also eligible for the First Time Home Buyer Tax Credit Manitoba. This is applicable for them even if they’ve previously owned a home. They must meet the following requirements:
- They must claim the disability on their tax return amount in the same year they bought the home.
- The home claimed for the first-time home buyers’ tax credit must be suitable for the disabled person’s needs.
- And they must occupy the home within one year of buying it.
- To claim the tax credit, they must complete Form T2201, Disability Tax Credit Certificate, and have a medical practitioner certify that they have a severe and long-term impairment.
What if I’m buying a home with someone else(spouse, common-law partner, or friend)?
The First Time Home Buyer Tax Credit Manitoba is only available once per household. That means the tax credit can be claimed once someone buys a home with a partner, co-purchaser, or joint mortgage.
However, the homeowner can claim credit in a variety of ways. For example, they could claim the entire $5,000, their partner could claim the whole $5,000, or they could split it between themselves. Depending on how much tax each of them pays, they can claim. The decision is for the homeowners to make, as long as the total doesn’t exceed $5,000.
Final Words:
For a first-time homeowner, the first-time home buyer tax credit helps save some cost of purchasing the dream house. Many would think it’s not much and why go through the hassle of applying? Even if not much but covers up some of the costs, as applying for it is easy and a simple procedure, it would be missing out on an easy-to-grab opportunity.
Terms :
- Line 31270 – Home buyer’s amount
Line 31270, previously known as line 369, is the home buyer’s amount that one can claim for the qualifying house. The highest amount one can claim is $5000. - T2201 Disability Tax Credit Certificate
T2201 is a disability tax credit; now, medical practitioners fill out their portion of the form using the new digital application for the disability of tax credit. - RRSP
RRSP means Registered Retirement Savings Plan with the Canadian federal government that one can contribute for retirement purposes. When one contributes money to RRSP, the funds are tax-advantaged, which means they are exempt in the year one contributes. - CRA
CRA means Canadian Revenue Agency.
