Tax Tip - Did you buy, build, sell or renovate a home in 2020? Here's what you need to know Français
OTTAWA, ON, March 24, 2021 /CNW/ - To get ready for a tax filing season like no other, here are some helpful tips and information if you bought, sold or made renovations to a home in 2020.
Buying or building a home
If you bought or built a home in 2020, you may be able to:
Claim $5,000 on your tax return: You may be able to claim the $5,000 home buyers' amount on your tax return if you bought a qualifying home in 2020. To claim this amount, you must not have lived in another home that you or your spouse or common-law partner owned in any of the previous four years (i.e. a 2016 to a 2020 purchase) before the qualifying home was bought. Claiming this amount can result in a non–refundable tax credit of $750.
If you are eligible for the disability tax credit, you do not have to be a first-time home buyer to claim the home buyers' amount. However, the purchase must be made to allow the person with the disability to live in a home that is more accessible or better suited to their needs. This may also apply to an individual that bought the home for the benefit of a related person who is eligible for the disability tax credit.
Claim the GST/HST rebate on a new build: You may be able to claim a new housing rebate for some of the GST/HST you paid on your home if one of the following applies:
- you bought a newly built home (building and land) from a builder to use as your principal residence
- you built, or engaged someone else to build a house to use as your principal residence
- you substantially renovated a house to use as your principal residence
Claim home accessibility expenses: You may be able to claim eligible renovation expenses that make your home more accessible if one of the following applies:
- you are 65 years of age or older at the end of 2020
- you are eligible for the disability tax credit
- you are an eligible individual that can claim certain tax credits for a qualifying individual
If you plan to buy or build a home, you may be able to:
Withdraw up to $35,000 from your registered retirement savings plan (RRSP): You may be able to use the Home Buyers' Plan (HBP) if you're a first-time home buyer and plan to live in the home within one year of buying or building it. This plan lets you take money out of your RRSP to buy or build a home for yourself. You have up to 15 years to repay the total amount to your RRSP.
If you are eligible for the disability tax credit, you do not have to be a first-time home buyer to use the HBP. This also applies if you are helping a relative who is eligible for the credit to buy or build a home. The purchase or construction must be done to allow a person with a disability to live in a home that is more accessible or better suits their needs.
Selling a property
If you sold a property in 2020, you need to:
Report the sale: If you sell a property—even if it is your principal residence—you have to report the sale on your tax return for the year you sold the property. How you report depends on what type of property you sell.
If you sell your principal residence or are deemed to have disposed of it, you do not usually have to pay tax on any gain from the sale. This is because of the principal residence exemption. Starting with the 2016 tax year, the Canada Revenue Agency (CRA) allows the principal residence exemption only if you report the disposition and designation of the home on your income tax return. If you didn't report the sale and designation of your principal residence in these years, you need to change your return and file a late designation for the related year as soon as possible.
If you sold a property that was not your principal residence (such as a rental property or a property that you flipped), you need to:
Report the gain or profit you made: Your intention matters when you buy a property. If you bought a property mainly to sell it or rent it out, or if it was a secondary property and not your principal residence, you may owe tax on any resulting gain or profit.
For information on reporting real estate income go to canada.ca/cra-report-real-estate-income.
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SOURCE Canada Revenue Agency
Media Relations, Canada Revenue Agency, 613-948-8366, [email protected]
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