Owning a home in Ontario comes with tax breaks many people never claim. Here are the main ones and who can use them.
What does a write-off mean?
A write-off, or deduction, is an amount the Canada Revenue Agency (CRA) lets you subtract from your income. Less taxable income means less tax. A tax credit works a little differently. It lowers the tax you owe directly.
Can I claim my home office?
If you work from home, you may be able to claim part of your heat, hydro, internet and maintenance. Self-employed people claim this on their business return. Employees usually need a signed T2200 form from their employer. The space must be where you mainly work, or used only for work and to meet clients.
What can I deduct if I rent part of my home?
If you rent a basement unit or own a rental, you can deduct costs tied to the rental. These include mortgage interest, property tax, insurance, repairs, utilities and advertising. For a unit in your own home, you claim only the rental share of each cost.
Do I pay tax when I sell my home?
Usually not. The Principal Residence Exemption means the gain on the home you live in is tax-free when you sell. You still need to report the sale on your tax return for that year.
Are there breaks for energy upgrades?
Governments and utilities often offer rebates for things like heat pumps, insulation and better windows. These programs change often, so check what is open before you start the work.
What about buying costs and moving?
- Land transfer tax refund. Ontario refunds up to $4,000 of land transfer tax for eligible first-time buyers.
- Home Buyers’ Amount. First-time buyers can claim a federal credit worth up to $1,500.
- Moving expenses. If you moved at least 40 kilometres closer to a new job or business, you may deduct moving costs such as transport, storage and short-term lodging.
The bottom line
Home office costs, rental deductions, the tax-free sale of your home and first-time buyer credits can add up. Talk to an accountant about what fits you, and check the CRA website for current rules. For selling a home, see the CRA page on capital gains.
Talk to us
Thinking about a rental unit or a move? Book a call with Lisa or Kelly, or phone 289-723-2126, and we will walk through the mortgage side.
Common questions
Do I pay capital gains tax when I sell my home in Ontario?
Usually not. The Principal Residence Exemption makes the gain on the home you live in tax-free. You still report the sale on your tax return.
Can I deduct my mortgage interest in Canada?
Not on the home you live in. You can deduct interest on the part of a property you rent out, or on a home office used for a business in some cases.
What tax breaks do first-time buyers get in Ontario?
Ontario refunds up to $4,000 of land transfer tax for eligible first-time buyers, and the federal Home Buyers’ Amount is worth up to $1,500.