Meet the Lees.
The Lees heard that the Government of Canada wants to help first-time home buyers with a tax credit and they're excited to learn more!
They've just purchased their first home, and they can use some tax savings. So how does it work?
The First Time Home Buyers' Tax Credit is a non-refundable tax credit that you can claim if you bought a qualifying home.
A non-refundable tax credit reduces the federal income tax that the Lees have to pay.
However, if the total of their non-refundable tax credits is more than their federal income tax payable, the Lees won't receive a refund for the difference.
So how do the Lees save this tax money? The tax credit is based on $5,000. For 2012, their credit is 15%, the lowest personal income tax rate, times $5,000.
We'll spare the Lees the math—the credit is $750, maybe enough savings to hire student painters or buy that reclining chair they've been eyeing.
But what's a qualifying home?
The home has to be in Canada, and can be new, or already built. It can be a condominium, an apartment, a townhome, a detached, or semi-detached home.
It can also be a mobile home, or a share in a co-operative housing corporation if the share in the co-op gives you the right to own the unit.
And the home must be registered in Dave and / or Kim's name.
Either Dave or Kim or both can make the claim, since the buyer and the buyer's spouse or common-law partner qualify.
And people who buy their first home with their friends also qualify. No matter what, the combined total amount claimed can't be more than $5,000.
But the credit is for first-time home buyers. Dave owned his apartment while he was in college. Is he still eligible?
A buyer who has not owned a home in the year of purchase or in any of the last four preceding years qualifies. So Dave qualifies as long as he has not owned a home since 2007.
Kim's aunt who is disabled bought a home that will accommodate her disability. Kim is extra happy because her aunt can claim the Home Buyers' Tax Credit as well.
People who are disabled, or buying the home for a disabled relative, also qualify for the credit, and it does not have to be their first home.
It must enable the person with the disability to live in a more accessible dwelling or in an environment better suited to their personal needs and care.
Dave and Kim are so excited to be saving money on their income tax! All they need to do is fill in the amount on Line 369 of their income tax return and voila! Up to $750 saved.
Want to be like Dave and Kim? Here is a link with more information about the First Time Home Buyer's Tax Credit.