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How to Handle Toronto's Inherent Property Tax Increase: Tax Advice for First-Time Buyers

Mark Virgil Lofranco • 9 December 2024

Buying your first home in Canada is an exciting milestone. However, potential and current homeowners in Toronto should be aware of a major change on the horizon: a proposed 10.5% increase in residential property taxes, the largest since 1998. This hike, driven by a nearly $1.8B budget shortfall, includes a 1.5% increase dedicated to city-building projects, such as transit and housing. Homeowners could face an extra $26.75 per month, or $321 annually, in property taxes. City officials have also warned that without federal funding, property taxes could rise even further, up to 16.5%.

If you’re concerned about the impact of these changes on your finances, here are five tax credits, deductions, and rebates that can help offset the burden:


1. Homebuyers’ Amount


First-time homebuyers can benefit from the homebuyers’ amount, a non-refundable tax credit of up to $10,000 for homes purchased in 2022 or later. If you bought your home in 2021 or earlier, the credit is capped at $5,000. This credit can provide some relief against rising costs due to increased taxes.


Eligibility criteria include not having owned a home in the past four years. However, if you or your spouse are eligible for the disability tax credit (DTC), the four-year rule is waived, and you can claim the homebuyers’ amount if you buy a more accessible home.


2. Home Buyers’ Plan (HBP) Repayments


The Home Buyers’ Plan (HBP) allows first-time homebuyers to withdraw up to $35,000 from their registered retirement savings plan (RRSP) tax-free to buy or build a home. With property taxes increasing, this plan offers financial liquidity when needed most.


HBP repayments begin in the second year after your withdrawal, with up to 15 years to repay the full amount. If you fail to repay a scheduled amount, it will be added to your taxable income for that year.


3. GST/HST New Housing Rebate


If you’ve bought a new or substantially renovated home, the GST/HST new housing rebate can offer financial relief. This rebate reduces the financial burden imposed by the GST/HST on newly built or significantly renovated homes. The rebate amount depends on the value of the home and the GST/HST paid.


4. Rental Property Relief


If you own rental property, the Toronto property tax increase will affect you as well. Property taxes for rental properties are expected to increase by around $321 annually. It’s essential to declare rental income on your tax return and take advantage of deductible expenses such as property taxes, mortgage interest, utilities, insurance, and maintenance costs to reduce your taxable income.


5. Home Accessibility Tax Credit (HATC)


If you’re a senior (65 years or older) or a person with disabilities, you may qualify for the home accessibility tax credit (HATC). This tax credit covers up to $10,000 in renovation expenses that make your home safer or more accessible. Those supporting a qualifying individual may also be eligible for this credit.


By leveraging these tax credits and deductions, homeowners and landlords can navigate the financial impact of rising property taxes and maintain more control over their finances.

Understanding the USA/Canada Tax Treaty

by Mark Virgil Lofranco • 9 December 2024
Are you a U.S. citizen living and working in Canada? Maybe you're a dual resident unsure of which tax rules to follow, or perhaps you cross the border daily to work for a Canadian company. Understanding the U.S./Canada Tax Treaty is essential for anyone earning cross-border income.  Filing taxes in just one country can be complex, and the U.S. tax system is one of the most complicated in the world. Figuring out taxes for both Canada and the U.S. can be challenging, but don’t worry, we’ve got answers. Here’s how your taxes work under the U.S./Canada tax agreement if you’re living or working in Canada and earning income.

9 Commonly Overlooked Tax Deductions for Startup Owners

by Mark Virgil Lofranco • 9 December 2024
Starting your own business is an exciting and rewarding journey, but with all the enthusiasm, some important financial details—like tax deductions—can be overlooked. As a new business owner, reducing your tax burden is crucial to maximizing profits, yet many Canadian small-business owners miss out on valuable tax deductions, paying up to 42% in taxes.  While you're likely familiar with common deductions like office supplies, meals, and wages, there are many lesser-known tax breaks that could save you money. Let’s dive into nine commonly missed tax deductions that could benefit your startup.

Methods to withdraw RESP

by Mark Virgil Lofranco • 9 December 2024
Navigating the financial landscape of your child’s education expenses, especially with rising inflation, can be challenging. Whether you're already contributing to a Registered Education Savings Plan (RESP) or considering opening one to fund your child’s post-secondary education, it’s essential to understand the rules and benefits associated with RESP withdrawals.  Here’s a comprehensive guide to help you make the most of your RESP in Canada.

Essential Tax Credits and Grants Every Small-Business Owner Should Be Aware Of

by Mark Virgil Lofranco • 9 December 2024
Did you know that public funding could help kickstart your business? While many entrepreneurs are familiar with startup loans, fewer know about the wealth of public funding options available—specifically, tax credits and grants. These financial resources can be game changers for launching and growing your business.  This article will guide you through various tax credits, grants, and other public funding options that can support your small business.

A CRA Business Number (BN): What Is It and Who Needs One?

by Mark Virgil Lofranco • 9 December 2024
Congratulations! Whether you’ve just become self-employed or started a side gig to earn extra income, you're on an exciting journey. Amid all the hustle, you might have come across something called a Business Number (BN). But what exactly is it, and do you need one? Let’s dive in and explore everything you need to know about registering for a BN as a self-employed person or small business owner.

2023 Canada Tax Checklist: Essential Documents You Need to File Your Taxes

by Mark Virgil Lofranco • 9 December 2024
Picture this: tax season is approaching, and you’re frantically trying to gather the documents you need, worried you might miss something important. Sound familiar? That’s why having a tax checklist is essential. It helps you stay organized and ensures you have everything you need to file smoothly.  In this article, we’ll cover all the documents you need to have handy when filing your taxes!

2024 Tax Deadline: When Is the Last Day to File Your Taxes?

by Mark Virgil Lofranco • 9 December 2024
As a taxpayer, one of the most critical aspects to stay on top of is the deadline for filing your taxes. The Canada Revenue Agency (CRA) enforces strict due dates for both returns and payments. Filing on time not only helps you avoid interest and penalties but also ensures you get your refund faster. We’ve compiled all the key tax dates you need to know for a stress-free tax season.

NETFILE Opening in Canada: When You Can Start Filing Your Taxes

by Mark Virgil Lofranco • 9 December 2024
The way we file taxes has evolved dramatically over the past two decades, making it faster and more efficient to submit your returns. With tools like NETFILE, the Canada Revenue Agency (CRA) offers taxpayers a quick and secure method to file returns online. This article explains when to file your taxes, key deadlines, how NETFILE works, and why it’s a great option for fast-tracking your tax return.

Missed the Tax Deadline? Here’s Why It’s Not Too Late to File

by Mark Virgil Lofranco • 9 December 2024
If you missed the tax filing deadline and are feeling anxious, take a deep breath—it’s more common than you think, and it’s not too late to take action!  You can still file your tax return even after the deadline, and this article will walk you through the process to help you file confidently and minimize any potential penalties.

How to Claim the British Columbia Sales Tax Credit (BCSTC)

by Mark Virgil Lofranco • 27 November 2024
When you shop in British Columbia (BC), the price on the tag is rarely what you pay at the till because of the additional sales tax. However, for some low-income residents, there’s relief in the form of the BC Sales Tax Credit (BCSTC) , a refundable tax credit that offsets some of the provincial sales tax (PST) you pay. This credit is designed to help low-income taxpayers and families and can even result in a refund if you had no income. Let’s dive into how this tax credit works and how you can claim it.
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