10 tax deductions for property owners in Canada

Property taxes are one of the main ways governments are funded. They allow local governments to pay for a wide range of public services, such as building roads and schools, police services, trash collection, and snow removal. However, property taxes can also be a considerable expense, especially for a property management company. Learning more about the many ways someone can lower their property taxes may be very useful for the next tax season.


What tax responsibilities do I have as a property owner?


Any person in Canada who owns some form of real estate or rents a home must pay property taxes. A property owner's tax responsibilities depend on the municipality where they live. Homeowners' property taxes are paid directly to the municipal government while renters pay property taxes as part of their monthly rent.

Payments must be made on an annual, semi-annual, or quarterly basis. Canadian property tax rates are calculated based on two main factors:  The municipal property tax rate and the worth of the property being taxed. Normally, a government-authorized entity will assess property values on a regular basis.


How should a property owner file taxes?


Property taxes are paid to the municipality that sends a property tax notice. Typically, there are two ways to do this: One can either pay the municipality directly or pay through their mortgage. A person may pay property taxes by phone, mail, or online. One may also choose to pay through a bank, credit union, or other financial institution. It is possible to set up pre-authorized advance payments with a financial institution.


In certain situations, it will be required for property taxes to be combined with a mortgage. This may happen to first-time homebuyers or individuals who have less than 20% equity in their homes. Property taxes paid through a mortgage can be broken down into 12monthly payments.


10 tax deductions for homeowners in Canada


Just like all Canadians can claim a Basic Personal Amount (BPA) to receive a standard deduction, homeowners have the opportunity to reduce their filing costs and save money. By learning more about the deductions available to you, you can drastically lower the actual cost of moving, renting, and managing your property.


1. First-Time Home Buyers' Tax Credit (HBTC)


People who bought their first home in the last year, or those who haven't lived in a self-owned home in the last four years, may qualify for the First-Time Home Buyers' Tax Credit. This will add $750 to a person's tax refund. It is important to note that the property must be the buyer's primary residence. This will be easier to confirm if the address is designated in public records such as the mailing address or in income taxes


2. HomeBuyers Plan (HBP)


The HBC concerns individuals and/or spouses who are residents of Canada with qualifying Registered Retirement Savings Plan(RRSP) contributions. They may be eligible for a $35,000 tax-free withdrawal to use towards their first home's down payment. The withdrawn amount must be repaid through RRSP contributions within 15 years to remain tax-free. If these are not paid back, then they must be paid with additional taxes.


3. GST/HST New Housing Rebate


If an individual has paid a Goods and Services Tax (GST) or a Harmonized Sales Tax (HST) on a home that's been built or renovated to a like-new condition recently, then they may eligible for refundable credit in the form of a new housing rebate.

Personal properties eligible for property owner tax deductions include:


●      Detached or semi-detached single-unit houses

●      Duplexes

●      Condominium units

●      Townhouses

●      Units in co-operative housing corporations

●      Mobile homes

●      Floating homes


4. HBTC for people with disabilities


An individual who meets the CRA's criteria for a person with disabilities may be eligible for an HBTC even if it's not the first time they purchase a home. This benefit is also accessible to people who have a spouse or common-law partner who qualifies.


5. Home Accessibility Tax Credit (HATC)


The HATC concerns people who make permanent renovations to their homes for accessibility reasons. This is a common deduction to make if you or someone close to you needs help moving around the house. One may be able to save up to $10,000 in taxes.


Eligibility requirements to access this tax benefit include:


●      Being a homeowner who qualifies for the disability tax credit

●      Being eligible to make the claim on behalf of a qualifying person

●      Being over 65 years old


6. Medical expenses tax credit


The tax rules of this type of deduction are similar to those of the HATC. If a home must be made more accessible for a homeowner or qualified dependent, then as much as 25% of eligible medical expenses may be recovered as a tax credit refund.


7. Rental income deductions


Rental real estate must be declared as taxable income. However, rental property owners can claim a series of allowable expenses. Rental property tax deductions include advertising fees, repair costs, property taxes, insurance, and interest on borrowed money used to purchase or renovate a rental property. Likewise, capital improvement costs may also be deductible.


Deducting property taxes from rental real estate tax returns can save a rental property business a considerable amount of money. Because there are many operating expenses associated with renting, the services of a property tax professional offer renting homeowners a great opportunity to improve their rental incomes.


How to properly raise prices


8. Capital Cost Allowance (CCA)


Capital Cost Allowances are deductible expenses on renovations made to rental properties considered to be depreciating assets. However, if the property is sold, the value of CCA claims may have to be paid back as a capital gains tax.

9. Tax-deductible moving expenses


If a person is moving 40 kilometers away to take a new job, launch a new business, or as a full-time post-secondary student, then the cost of travel and other moving expenses may be considered deductible. Some of the eligible moving costs include travel expenses, moving company bills, hotel bills, and legal fees.


10. Home office expenses


Individuals who use their principal residence as their place of work may be eligible for home office deductions.Homeowners who work remotely from home may include a portion of their utility bills, homeowners' insurance, internet bills, office supplies, and more as business expenses.


What records should I keep?


All records and supporting documents related to long-term acquisitions and disposal of property should be kept indefinitely. The same is true for the share registry and other historical information that may have impacted the sale, liquidation, or wind-up of a business.


Property tax bills should be kept for a minimum of six years. In case the Canada Revenue Agency requires a person to keep their records for a longer time, an official will communicate this in person or by email.


Need help with your year-end finances?


While a property is normally seen as a great asset, it can easily become a tax liability. It is important to know how to manage rental property, including how to make good use of capital losses and to hold future investments in tax-advantaged accounts. Whether you wish to deduct the costs of your first home, manage your rental expenses, or become a professional or part-time property manager, Stamped can help you file your taxes like a pro.


Stamped mixes professional expertise and technology to deliver an efficient and accessible  accounting solution. By using astate-of-the-art artificial intelligence solution, the experts at Stamped can retrieve financial data directly from financial apps and analyze it to improve the way a business or individual handles their taxes and other finances.


By partnering with Stamped, you can work alongside a dedicated account manager ready to assess your concerns. Our remote customer service guarantees that you can get the answers you need within one business day. Our professional services are ideal to turn your investment in property from a costly endeavor to a lucrative opportunity.


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Alexandre Ouellet, Copywriter/Rédacteur

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