You may think you know the rules…
Traditionally personal income taxes are due by the end of April each year. If you or your spouse are self-employed or run a business, then you have some extra time – until June 15th. There is no change for the current tax year.
Personal taxes: Midnight on Apr 30, 2012
Self-employed: Midnight on June 15, 2012. Taxes owing are still due by Apr 30th.
One of the most discussed tax topics revolving around the ownership of a house are:
- Can I deduct mortgage payments?
- When selling a house will trigger taxes on capital gain?
- Are there any tax credits available for home owners?
Deducting mortgage payments
You can deduct only the interest portion of your mortgage payments related to a property if:
- It is a rental property; or
- It is your principal residence, which is used to run a business and earn income. The amount you can deduct is then prorated to match the portion of the home used for business purposes.
What happens when you sell real estate property?
Most people think that when you sell principal residence all gains are tax free. That is the general rule, but it is not quite simple. As pointed out here,
CRA usually considers that if there is more than 1/2 hectare (1.25 acres) of property, only 1/2 hectare of the land can be considered part of the principal residence, and there would be a capital gain on the excess when the property is sold, even if the rest is the principal residence.
Then there is the issue of the frequency of you buying-selling; buying again – selling again properties. In some cases the taxman may decide that frequent moves have been motivated to earn capital gains despite the fact that it was your principal home.
If you have sold real estate property in 2011 your best first step would be to consult with these two CRA interpretation bulletins:
Those, who bought a principal residence in 2011 and qualify to be first time home buyers can claim $5,000 of tax credit on line 369. To make sure that you qualify, read the fine print here.
A somewhat obscured provincial tax credit is available to seniors in Ontario (age 64 and older), who live in their own residence. Ontario senior homeowners’ property tax grant does not kick in automatically with your age. You have to apply for it. The size of the grant depends on the size of the property tax paid during the year.
With that in mind, get your paperwork ready and file on time. Otherwise you risk penalties and… the close attention of CRA, which is rarely a pleasant experience.