Great Tax Tips For You
Home Renovation Tax Credit
The new Home Renovation Tax Credit (HRTC) introduced in the 2009 Federal budget means that if you’ve been planning on renovating your home, 2009 is a good time to do it. For eligible home renovation expenditures made after January 27, 2009 and before February 1, 2010, families will be able to claim a 15% non-refundable tax credit for certain amounts paid to renovate their residence. The credit will apply only to expenditures in excess of $1,000, to a maximum of $10,000. As a result, any family that spends $10,000 or more on qualifying home renovations will receive a federal credit of $1,350 ($9,000 x 15%).
An eligible dwelling is the taxpayer’s “principal residence” at any time during the period (as defined under existing tax law) and could include a single residence, cottage, condominium or co-operative housing unit. Individuals who earn business or rental income from part of their residence will only be able to claim a credit with respect to amounts incurred for the personal are of the residence. For expenditures that relate to the entire residence – such as a new roof – the amount paid must be allocated between personal and income-earning use.
Eligible expenditures include amounts incurred for labour, material, equipment rentals and permits in relation to a renovation or alteration of a dwelling, provided it is of an enduring nature and is integral to the property. This would include windows, flooring, roofing, etc. The following expenditures will not qualify for the credit:
- the cost of routine repairs and maintenance normally performed on an annual or more frequent basis;
- expenditures for appliances and audio-visual electronics;
- financing costs associated with a renovation; and
- other indirect expenditures that retain a value independent of the renovation (e.g. furniture and draperies).
Although receipts will not have to be submitted with the return, the claim must be supported by acceptable documentation such as agreements, invoices and receipts in the event Canada Revenue Agency wants to review the claim.