Tax Benefits of Homeownership-Before December 31st

The holidays are around the corner, but there’s another season to think about: tax season.

Owning a home can also open the door to valuable tax benefits of Homeownership. Understanding how to make the most of these programs before December 31st can lead to meaningful savings come spring.

Here’s a closer look at the Canadian homeowner tax deductions and credits you can still take advantage of this year, along with last-minute moves that can help you maximize your return.

The Home Buyers’ Amount: Don’t Leave Money on the Table

If you bought your first home this year, congratulations! You may qualify for the Home Buyers’ Amount (HBA).

This non-refundable tax credit allows eligible first-time homebuyers to claim up to $10,000, resulting in tax savings of up to $1,500 (based on the current 15% federal rate).

To qualify, you must:

• Have purchased your first home (or not owned one in the previous four years).
• Occupy the home as your principal residence within one year of purchase.

Make sure your paperwork is complete and that your purchase closing date falls within 2025 to qualify for this year’s credit.

The Home Buyers’ Plan (HBP): Repayment Reminder

If you used your RRSP to help fund your down payment through the Home Buyers’ Plan, remember that repayments are due annually—and the CRA tracks them closely.

Failing to make your required repayment by December 31st means adding the amount to your taxable income for the year.

Double-check your RRSP contributions and designate a portion as your HBP repayment before December 31 to stay on track and avoid an unwanted tax hit.

Property Taxes and Mortgage Interest: Keeping Track for Next Year

Canadian homeowners can’t deduct mortgage interest or property taxes on their principal residence.  However, it’s still worth tracking these expenses, especially if you:

• Rent out part of your home (like a basement suite).
• Work from home and claim a portion of expenses.
• Convert your home into a rental property later.

In these cases, property taxes, mortgage interest, and certain maintenance costs become deductible expenses against rental or business income.

If you’ve started using a portion of your home for income-generating purposes in 2025, keep detailed records of expenses paid before year-end—they may become deductible for this tax year.

The Home Accessibility Tax Credit (HATC): Helping Seniors and People with Disabilities

You may qualify for the Home Accessibility Tax Credit (HATC) if you or a family member completed renovations to your home to make it safer or more accessible.

This non-refundable credit lets you claim up to $20,000 in eligible expenses, resulting in a maximum federal tax savings of $3,000.

Eligible renovations include:

• Installing grab bars, wheelchair ramps, or walk-in showers
• Widening doorways or hallways
• Adding handrails or stair lifts

If you’re considering accessibility improvements, completing them before December 31 ensures you can claim them for this tax year.

Multigenerational Home Renovation Tax Credit (MHRTC): New in Canada

Introduced recently, the Multigenerational Home Renovation Tax Credit (MHRTC) supports families building or renovating spaces to create a secondary dwelling unit for an immediate or extended family member.

Homeowners can claim up to $50,000 in eligible renovation expenses. “For full eligibility and how to claim, refer to the CRA’s MHRTC details.” A tax credit of 15% (for qualifying costs) can offer significant tax savings of up to $7,500.

Eligible expenses include:

• Construction of a self-contained suite
• Building permits and materials
• Professional labour and design costs

If your multigenerational renovation is underway, ensure all receipts date before December 31 and are clearly itemized. Only expenses paid within the tax year count.

Energy-Efficient Home Upgrades: Federal and Provincial Incentives

Eco-friendly upgrades can lower your energy bills and tax bills. The Canada Greener Homes Initiative, along with provincial programs, offers rebates and grants for energy-efficient home improvements.

Eligible upgrades include:

• Heat pumps and smart thermostats
• Insulation and air sealing
• Solar panels and windows
• Energy-efficient doors and roofing

While these are generally rebate programs and not direct tax credits, they can still reduce your overall costs and complement your long-term tax planning strategy.

Book an energy audit and pay deposits on approved upgrades before year-end to secure your eligibility, even if the work isn’t completed until next year.

Work-from-Home Deductions: Simplified Method Still Applies

If you worked from home in 2025, you may be eligible for home office deductions. The CRA’s simplified flat-rate method allows you to claim $2 per day, up to a maximum of $500 per year, without detailed receipts, another great advantage of Tax Benefits of Homeownership

If you use the detailed method, you can deduct a percentage of:

• Utilities (electricity, heating, water)
• Internet access
• Maintenance and minor repairs
• Property taxes and mortgage interest (for self-employed individuals)

Gather your utility bills and workspace measurements now. You’ll need these to calculate your deduction accurately when filing.

Rental Properties and Investment Homes: Keep Records Clean

If you own a rental or investment property, year-end is the time to ensure your expense records are complete. You can deduct:

• Mortgage interest and property taxes
• Insurance and maintenance
• Utilities (if you pay them)
• Advertising and management fees
• Capital cost allowance (CCA), which lets you depreciate the property’s value over time

Complete any repairs or maintenance before December 31 to ensure the costs fall in this tax year. But remember, capital improvements (like a new kitchen or roof) are depreciated over time, not immediately expensed.

The Home Accessibility Meets Green Upgrade Strategy

If you’re planning major renovations, consider combining programs such as installing energy-efficient accessibility features. For example, upgrading to a smart, low-threshold shower or eco-efficient HVAC system may qualify for both the HATC and Greener Homes incentives, depending on eligibility.

This strategic overlap can multiply your savings while modernizing your home for comfort and sustainability.

Your home is a powerful financial tool. As December 31 approaches, take advantage of every homeownership tax benefit available to you. Acting before the year ends ensures you maximize your tax benefits of homeownership in Canada and enter 2026 on solid financial ground.  Create an appointment with your local real estate agent for more information.