First Time Home Buyer’s Tax Credit & Tax Deductible Mortgages

Whittle it down: The First Time Home Buyer’s Tax Credit & Tax Deductible Mortgages

As my 20-something year old friend Maddi eloquently put, the only thing more confusing for first time home buyers than mortgages are taxes. And yes, Canadian mortgage rates, with their first time home buyer’s tax credit & tax deductible mortgages and taxes certainly do have a bad rep for being complicated. Anyone who has started diving into the world of “how do I use a mortgage payment calculator?” or “what are first time home buyer tax credits & what is a tax deductible mortgage” can certainly understand. But it doesn’t need to be the so complicated, even when mortgages and taxes are being combined. Yes, combined.

Read on for Aleem from The Mortgage Specialist’s breakdown on two ways you can save money: Tax Deductible Mortgages & the First Time Home Buyers’ Tax Credit (HBTC).

Tax Deductible Mortages

Tax Deductible Mortgage

What is it?

A tax deductible mortgage is a process of qualifying your mortgage payments as investments. It goes something like this: mortgage payment > re-borrowing > investing to earn income > tax deduction. Still confused? Imagine the following scenario:

Let’s say you want to invest your annual bonus – $15,000 – in mutual funds. Rather than investing the funds directly, you use the $15K to pay down your mortgage principle, than re-borrow the funds against your house to invest. In this case, because the $15K was effectively borrowed for the purpose of earning income, it qualifies as being tax deductible. But remember, in order to balance out all the details of your own specific situation, it is recommended to use a mortgage calculator to see how this payment would affect the principal. Or better yet, call us and we can help you with this calculation.

So is it right for me?

A tax deductible mortgage is definitely not for everyone since the level of risk involved is increased. However, if you are a first time home buyer in Canada who wants to know what kind of savings this kind of mortgage could bring, then you definitely shouldn’t hesitate to talk to your financial adviser and mortgage broker. They’ll be able to assess how much you could potentially save, and will also have a clearer idea of the specific risks associated with making your own mortgage tax deductible.


The First Time Home Buyers’ Tax Credit

First Time Home Buyer Tax Credit

What is it?

Not to be confused with the First Time Home Buyers’ Plan, the HBTC is a government initiative that gives $750 (for 2015) to first time home buyers. Here’s how it works: the government decides on the lowest federal income tax rate for the year, and then multiplies that by $5,000 (5000*0.15=750).

So is it right for me?

The CRA does have a few conditions you need to meet in order to get the $750. Essentially, the property that you are looking at has to be your principal residence no later than 1 year after you buy and you can share the amount with a co-buyer but not claim double. There are a few other conditions which can be found on their website, but if you meet those two main requirements then you are most probably eligible to get the tax credit!


To Wrap Things Up

Neither taxes nor mortgages need to be scary if you know how to make them work for you. So what are you waiting for? Take advantage of some of the all time lowest mortgage rates in Canada and talk to Aleem about getting your dream home now. He’ll dig through all the numbers and percentages for you to help you whittle it down so that you can be mortgage free faster.


Mortgage Traps

3 Mortgage traps, mortgage pitfalls, mortgage problems and how to avoid them. The mortgage trap: Panicking and accepting a high mortgage rate. Be wary of banks that offer you an extremely low initial rate with a significant increase a year later. For a first time home buyer in Canada, the complexities of mortgages…

First Time Home Buyer Vancouver

First Time Home Buyer in Vancouver- helping your children buy. With the high cost of buying real estate in the lower mainland of BC, many parents feel obliged to help their children buy their first home. A question that we often get asked is “what is the best approach in helping our children buy their first home”…


Canada Mortgage Rates- a Handy Guide to cibc mortgage rates

The Rate Tango: Canada Mortgage Rates Variable vs Cibc Mortgage Rates Fixed. Become an expert on Canadian Mortgage Rates with our Handy Guide. Many first time home buyers are wondering whether they should take advantage of this low rate or if they should lock in the more secure fixed rate mortgages…

Five Home Buying Tips For Millennials

It’s the perfect time to move to Vancouver. The job market is stable, the economy is recovering, and the housing market continues to rise. Now is a perfect time for millennials to move from home or stop renting and consider purchasing a home. Here are some tips to consider…


First Time Home Buyer Canada-are they risky

Today’s first time home buyers are well informed, they have their hands around their chequebook firmly and are really thinking before assuming the responsibility of home ownership. The careful planning of these first time buyers today should serve the Canadian housing market well as these responsible first time buyers grow into responsible long term home owners.

First Time Home Buyer Canada Tips To Get Your Mortgage Approved

You have found the perfect home, in the perfect neighbourhood, and you’re simply in love. Now what? Applying for a mortgage can sometimes be a daunting or scary process when faced with laying all your financial “dirty laundry” out to dry in front of a lender. Read on for our first time home buyer canada tips…


The Steps You Should Take as a First Time Home Buyer in Canada

Many first time home buyers make the mistake of going to banks for mortgage of houses and end up being at the receiving end of horrible deals. Remember that banks will only try and make you buy their own products at their own rates, they will not select the best available option for you…

First Time Homebuyer Co Signor And Guarantor Mortgage

If a buyer is unable to qualify for a mortgage due to poor credit, employment history, lack of down payment or income — most lenders will still consider lending if there is someone that the borrower can find who is willing to act as co-signor or guarantor for a mortgage. These two options have different…


Eligibility Conditions of First Time Home Buyers Plan for Canadian Residents

The government of Canada has introduced a First time Home Buyers’ plan to ease the load that home buying costs may exert upon its residents. The first time home buyers’ plan is a program that allows you to withdraw up to $25,000 in a certain year from your Registered Retirement Savings Plan (RRSPs) for yourself.

First Time Home Buyers Plan

As a first time home buyer in Canada you have the opportunity to use your registered retirement savings plan (RRSP) under the first time home buyers plan, towards your down payment There are some very specific guidelines for this program that first time home buyers should be clear about before buying a home…


If you would like more information or a free consultation contact Aleem below, and as a Certified Mortgage Specialist let me help you get the home of your dreams. Great Mortgages, Made Simple
Aleem Peermohamed - Mortgage Broker BC


More Posts

no interest rate hikes

Independent Mortgage Planner

Who Should You Get Your Mortgage Through? Hi Everyone, this is Aleem Peermohamed – The Mortgage Specialist Vancouver BC. One of my existing clients, who

Four Reasons To Save Money

Four Reasons To Save Money It’s not rocket science -everyone should be saving money regardless of how much you are making. The concept of saving

Mortgage Check-Up?

Eight out of Ten Canadians make a trip to the doctor at least once a year to help ensure they remain physically healthy. But how

Send Us A Message

Scroll to Top