Maximize Your Tax Return: 4 Essential Tips for Homeowners in 2024

Maximize Your Tax Return: 4 Essential Tips for Homeowners in 2024

As a Canadian homeowner looking to maximize your tax return in 2024 and beyond, I have here 4 new essential tips to help you make the most out of tax season.

First, make sure to take advantage of the Home Buyers' Plan. If you purchased your first home in 2023 or plan to do so in 2024, you can withdraw up to $35,000 from your RRSP tax-free to put towards your down payment. This can lead to substantial tax savings.

Second, keep track of any home improvement expenses. Renovations that increase the value of your home can be claimed as a capital expense, reducing your taxable capital gains when you eventually sell your property.

Third, don't forget about the Principal Residence Exemption. If you've lived in your home for the entire year, you can designate it as your principal residence and avoid paying capital gains tax when you sell. Just make sure to keep records of your residency.

Lastly, consider hiring a professional accountant to help you navigate the complexities of homeownership tax deductions. Their expertise can save you time and money in the long run.

Now, Let's dive in deeper:

First Home Saving Account 

Saving up for your first home is a significant goal for many Canadians. The new First Home Savings Account (FHSA) assists you in saving up to buy or build a qualifying first home, tax-free up to certain limits).

If you opened an FHSA (First Home Savings Account), you can claim up to $8,000 in contributions made by the FHSA by December 31, 2023 as a deduction from this year’s return.

Although it’s helpful to know about the tax credits and deductions, it’s still important to speak with an accountant or tax specialist to make sure that you’re taking full advantage of the credits and deductions available to you.

a photo of two couples and two young kids

Residential Property Flipping Rule

Secondly, since January 1, 2023, if you’ve owned a property for less than 365 days before selling it, the profit from the sale is now classified as business income rather than capital gain. There is an exception to this rule: you might qualify for an exemption if the property was already considered part of the taxpayer’s inventory or the sale was due to unavoidable circumstances. 

Home Office Expenses for Employees 

Working from home has a lot of great benefits for better work-life balance, and also has some tax incentives, too. Canadians can claim home office expenses such as office supplies, phone/internet expenses, and the portion of home space used for work.

However, there has been a change regarding the method used to claim home office expenses for employees who worked from home in 2023. The $2-per-day temporary flat rate for working from home during the COVID-19 pandemic in 2020, 2021, or 2022 is no longer applicable.

Now, employees must use the detailed method and fill out Form T2200, a Declaration of Conditions of Employment, signed by your employer.  

Multigenerational Home Renovation Tax Credit 

Families that follow the “more the merrier ” approach might be eligible for the Multigenerational Home Renovation Tax Credit (MHRTC). This refund is available to those who have renovated their homes to accommodate more family members, provided the space created meets specific criteria.

The renovated space must meet specific criteria, including being self-contained with a separate entrance, kitchen, bathroom, and sleeping area, and complying with local regulations. 

Another primary eligibility factor for the Multigenerational Home Renovation Tax Credit is that either the occupant of the current residence or the new secondary unit must be over 65 years old. The MHRT incentive can be applied if a family member between 18 and 64 is eligible for the disability tax credit.

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