When I meet with homeowners to discuss whether they want to sell their homes or not, I get frequently asked questions, and I want to share them in this blog post because I’m sure if they’re asking these questions, others are, too. Senior homeowners have many concerns about selling their homes and potential tax implications.
Capital Gains Tax
There are misconceptions that you will be subject to capital gains tax on the sale if you receive a tax break or grant as a senior home seller, especially if it’s your primary residence. Whenever you are applying for tax credits or grants regarding your home, I always suggest doing so with the advice of a tax professional. Numerous programs offer tax breaks to seniors, and I have included some examples below.
When you sell your home or are considered to have sold it, you usually do not have to pay tax on any gain from the sale because of the principal residence exemption. This is the case if the property was solely your principal residence for every year you owned it.
You can deduct portions of your home maintenance costs, such as heating, insurance, electricity, and cleaning materials. You can also deduct part of your property taxes, mortgage interest, and capital cost allowance (CCA). I suggest contacting a tax professional to confirm your eligibility requirements for applying for tax credits.
Preparing to sell your home? Consider these blogs for more advice!
- Should I Buy a Home or Sell First as a Downsizer?
- I Want to Sell My Home But I Have Too Much Stuff
- When Can You Sell A Parents’ Home After They’ve Passed Away?
Ontario Senior Homeowners’ Property Tax Grant (OSHPTG)
You can receive it if you meet the eligibility requirements. You must be 64 years or older on December 31, 2024. For example, the grant is based on your residence’s occupancy on December 31, 2024, and the property tax paid on your home for 2024.
A frequently asked question by seniors is, “I am a senior who married another senior on November 28, 2023.” We both own principal residences for which we paid property tax in 2023. We will be selling one of our homes in 2024. Can we both apply for the 2024 Ontario Senior Homeowners’ Property Tax Grant (OSHPTG) on our 2023 returns?
Since you were married on December 31, 2023, only one of you can apply for the grant for both of you. As explained in the previous question, you cannot claim property tax paid on more than one principal residence at a time after marriage. However, you can claim the property tax paid on your residences before marriage.
Home Accessibility Tax Credit (HATC)
Did you renovate your home during the current tax year? As of writing this blog, you could claim home accessibility expenses.
You may be able to claim amounts paid for qualifying expenditures for qualifying renovation made to an eligible dwelling to:
- gain access to the dwelling or be mobile or functional within the dwelling; or
- reduce the risk of harm to the qualifying individual within the dwelling or when accessing the dwelling.
You can claim these expenses if one of the following applies:
- You are 65 years of age or older at the end of 2024, or you are eligible for the disability tax credit (DTC)
- You are an eligible individual who can claim certain tax credits for a qualifying individual
For the 2023 tax year and subsequent years, a qualifying individual can claim up to $20,000 in eligible expenses. HATC is calculated by multiplying the lowest income tax rate (15%) by the amount of the eligible expenses (max. $20,000), which would provide a tax credit of up to $3,000.
A qualifying individual can have only one eligible dwelling in the tax year. Still, in some instances, such as moving to a new dwelling, a qualifying individual can have more than one dwelling. In such cases, the total eligible expenses for both houses cannot exceed $20,000.
An eligible dwelling, which is a housing unit located in Canada, must fall into one of the following categories:
- Owned solely or jointly by the qualifying individual and inhabited in the tax year.
- Owned solely or jointly by the eligible individual and inhabited in the tax year with the qualifying individual.
A qualifying renovation is a renovation or alteration that is:
- purchased and performed in the tax year,
- is intended for long-term use,
- becomes an integral part of the dwelling and is immovable,
- improves access and mobility for the qualifying individual and
- reduces the risks for the individual, such as handrails and shower fixtures, to reduce the risk of falling.
It is recommended that a qualifying renovation or alteration be performed by a licensed and registered professional such as a plumber, electrician, carpenter, or contractor. Suppose the qualifying or eligible individual performs the work. In that case, the value of their labour cannot be claimed, and only the following expenses can be claimed as qualifying expenses:
- building plans
- building permits
- materials
- fixtures
- equipment rentals
Suppose the renovation or alteration work is performed by a family member related to the qualifying or eligible individual. In that case, the family member must be registered for goods and services tax/harmonized sales tax (GST/HST) under the Excise Tax Act.
Ontario Seniors Care at Home Tax Credit
A senior couple, 83 and 86, live in a house. Their annual family net income is $50,000 ($20,000 for her and $30,000 for him). Their annual medical expenses, including attendant care, total $5,400.
To calculate the credit, they first calculate their claimable expenses. They take 3% of his net income ($900) from their total eligible medical expenses ($5,400). Their claimable expenses are $4,500.
The amount of their Ontario Seniors Care at Home Tax Credit would be 25% of $4,500, or $1,125 before the income test reduces the credit amount.
The credit amount is reduced by 5% of the family’s net income over $35,000. Because the couple earns $50,000, their credit amount will be reduced by 5% to $15,000, or $750.
The couple will get $375 from the Ontario Seniors Care at Home Tax Credit.
You are eligible to claim the credit if you:
- turned 70 years of age or older in the year or have a spouse or common‐law partner who turned 70 years of age or older in the year
- are resident in Ontario at the end of the tax year
You can be eligible regardless of the dwelling type (for example, a house, an apartment, a retirement home, or a long-term care home).
On the hunt for senior-specific real estate advice? Check out these other blogs next.
- What Seniors Need to Know About Downsizing for Retirement
- Should You Hire a Senior Real Estate Specialist?
- Is Scarborough Good For Seniors?
Multigenerational Home Renovation Tax Credit (MHRTC)
You may be able to claim a refundable tax credit for certain qualifying expenditures paid for a qualifying renovation to create a self-contained secondary unit within an eligible dwelling. The unit must allow a qualifying individual (a senior or an adult eligible for the DTC) to reside with a qualifying relation.
Eligible individuals can claim up to $50,000 in qualifying expenditures for each qualifying renovation that they complete. For each eligible claim, the tax credit is 15% of your qualifying expenditures, up to a maximum of $7,500. To help you determine whether you qualify to claim the MHRTC, visit the eligibility checklist eligibility requirements for step-by-step instructions.
Ontario Electricity Support Program (OESP)
Ontario residents might be eligible to have their electricity bills reduced through the Ontario Energy Board and the OESP. You can apply anytime, but it is recommended that you do so sooner rather than later. The application can take 6-8 weeks to process. You might qualify for higher levels of assistance if you rely on an approved medical device requiring a lot of electricity. Devices include mechanical ventilators (invasive and non-invasive), oxygen concentrators, and kidney dialysis machines. Visit their website to see if you qualify.
Sell With a Senior Real Estate Specialist
Being a senior real estate specialist (SRES) has given me specialized training and expertise. I have over twenty years of experience working with older adults and their families as they transition into their next chapter. If you have any questions about the real estate market, call me!
Looking for a Senior Real Estate Specialist to guide your home sale? I can help! Call 647.283.2127 or email me at stuart@stuartnodell.com to get in touch.
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