Maximizing Your Tax Returns: Key Tips for Canadian Homeowners in 2024

It's that time of the year again folks, the time when you have to report your income, calculate your tax liability, pay your dues and claim a refund wherever applicable. It is long, time-consuming, and boring but extremely important. So, if you are looking to make the most of tax returns in 2024 then these 4 tips will be right up your alley.

Multigenerational Home Renovation Tax Credit

If you have renovated your primary place of residence recently to accommodate the needs of more family members then this tax credit is something you need to check out right away. As long as the renovated space meets the following criteria

• Self-contained with separate entrance, kitchen, bathroom, sleeping area, and comply with local regulations.

• The occupant of the renovated space must be over 65 years of age or if the member is between the ages of 18-64 and qualifies for the disability tax credit.

This tax credit is aimed at incentivizing renovations to accommodate multigenerational living arrangements. If you are that person then you are looking at a tax credit of 15% up to a maximum of $50,000 spent. This translates to a maximum credit amount of $7,500.

Residential Property Flipping Rule

Implemented on January 1, 2023, the Residential Property Flipping Rule has significant implications for property owners looking to sell their homes within a short timeframe. Under this rule, if a property has been owned for less than 365 days before its sale, any profit generated from the transaction is categorized as business income rather than capital gain. However, there is a notable exception to this regulation: individuals may qualify for an exemption if the property was already deemed part of the taxpayer's inventory or if the sale was prompted by unavoidable circumstances. This rule aims to deter short-term property flipping by imposing tax consequences on quick sales, thereby encouraging more stable and long-term property ownership.

So if you have sold the property due to unavoidable circumstances such as death in the family or job relocation then make sure to claim your tax benefit. If not then try to hold off on selling the property for 365 days to avoid tax consequences.

Home Office Expenses for Employees

Being a work-from-home employee myself I know all about the benefits it offers for a better work-life balance and now in Canada, it has some tax benefits too. As we all know home owners working from home can claim home office expenses, including office supplies, phone/internet expenses, and the portion of home space used for work. However, the methods of claiming these expenses have now been changed.

To provide more clarity and ensure accurate reporting of home office expenses the temporary $2-per-day flat rate during the COVID-19 pandemic in 2020-2022 is no longer applicable. Employees are now required to use the detailed method and fill out Form T2200 (obtained through the employer only), signed by the employer.

First Home Saving Account

The First Home Savings Account (FHSA) marks a significant initiative aimed at aiding Canadians in realizing their dreams of homeownership. This program offers a strategic avenue for individuals saving towards their first home by allowing tax-free savings up to certain limits, specifically tailored to facilitate the purchase or construction of a qualifying first home. Notably, contributors to the FHSA can claim up to $8,000 in contributions made by December 31, 2023, as a deduction from their tax return, providing a tangible financial benefit.

Read more: First Home Savings Account: All You Need To Know

But Remember

While these tips present promising tax-saving opportunities for homeowners, individuals must seek guidance from financial experts, such as accountants or tax specialists, to ensure optimal utilization of available tax credits and deductions. These professionals possess the knowledge and experience to assess individual financial situations comprehensively, identifying all applicable tax-saving strategies and ensuring compliance with relevant regulations.