Vancouver: Owning your own home is an exciting time, but the complications it causes in your tax return can dampen that excitement. The Chartered Professional Accountants of British Columbia (CPABC) have prepared some tips for new homeowners:
- Don’t forget about the first-time home buyer’s tax credit.
If you purchased your first home in 2017, you might qualify for a home buyers’ tax credit, which is a non-refundable tax credit worth up to $750. To qualify for the credit, you or your partner must acquire a qualifying home, and you must show that neither you nor your partner owned and lived in another home owned by either of you in the year you purchased your new home or any of the four preceding calendar years. Check with a chartered professional accountant today to see if your home is considered a qualifying home.
- Look into deductible expenses if you rent out your house.
If you rent out all or a portion of your house, you may deduct certain expenses connected with your rental income. These expenses include the proportion of your property taxes, mortgage interest, repairs and maintenance, insurance, light, heat, other utilities, and other expenses that relate to the rental space of your house. You might also want to look into claiming a capital cost allowance on any depreciable assets in your rental property. However, be aware that claiming a deduction for capital cost allowance on your house might jeopardize your ability to claim the principal residence exemption to offset the future sale of your home.
- Be familiar with the term “change in use.”
If, you begin to use your home as a rental property during the year, you have what is called a “change in use,” which could lead to a significant and unexpected income tax liability. You should consult a chartered professional accountant to understand the income tax implications if you plan on renting out your home.
Get more tax savings tips with CPABC’s RRSP and Tax Tips at www.rrspandtaxtips.com.