CRA has made a few changes to how it wants you to file property-related expenses. Most Canadians must file their tax returns by April 30, 2024. I’m sharing the new tax reporting rules regarding claiming home office expenses, saving for your first home, flipping homes, and co-signing on a mortgage.
Home Office Expenses
During 2020, CRA was lenient when it came to claiming home office expenses. This year, they expect employers to justify that employees have to work from home vs. want to work from home in order to claim the costs associated with a home office on their tax returns. You can learn more on the CRA website Home office expenses for employees>>
First Home Savings Account
Similar to claiming an RSP contribution, a First Home Savings Account allows a tax benefit when you contribute. This is a great way for first-time home buyers to save for their first home. You can learn more on the CRA website First Home Saving Account (FHSA)>>
Residential Property Flipping Rule
In the past, CRA was lenient on defining “primary residence.” If you bought and sold a home for a profit within a year and claimed it as a primary property, you were in the clear not to claim capital gains. The new rule states that you must live in the home for at least one year to avoid claiming capital gains. You can learn more on the CRA website Residential Property Flipping Rule>>
Bare Trust Agreement for Co-signers
Due to the new tax reporting rules, many more Canadians will have to file a trust tax return this year. If you have a joint bank account or co-signed a mortgage, you might be part of a “bare trust” agreement. A bare trust may exist when someone holds legal title to an asset, but some or all of the asset technically belongs to someone else. New tax reporting rules state that if a parent co-signs for their child’s mortgage and is on the property title, they must file the bare trust agreement. You can learn more on the CRA website New Reporting Requirements for Trusts>>
Speak with your accountant for more information on the new tax reporting rules. They can guide you through the process, offer personalized advice based on your financial situation, and ensure that you maximize your deductions and credits. Additionally, staying in touch with your accountant throughout the year can help you proactively manage your finances and make informed decisions that benefit your overall financial health.
