To stimulate economic growth and encourage Canadians to invest in improvements to their homes, the 2009 Federal Budget proposed a temporary Home Renovation Tax Credit (HRTC).
Home owners will be able to claim a 15% non-refundable tax credit (i.e. can only be applied to the extent that taxes are payable) for eligible expenditures on their 2009 tax returns.
The credit will apply to expenditures in excess of $1,000, but not more than $10,000, resulting in a maximum credit of $1,350 ($9,000 x 15%).
Eligibility Period
The credit will apply only to the 2009 taxation year. Expenditures for work performed, or goods acquired, after January 27, 2009 and before February 1, 2010, will be eligible. The credit will, however, not be available if the expenditure is made pursuant to an agreement entered into before January 28, 2009. Individuals may claim this credit (including 15% of expenditures made in January 2010) in their 2009 income tax returns.
Eligibility
Family members (spouses or common-law partners and their children under 18) are subject to a single limit based on their pooled expenditures. The credit is only availble for expenditures on the family’s principal residence.
Expenditures will qualify for the HRTC if they are incurred in relation to a renovation or an alteration of the principal residence provided that the renovation is of an enduring nature and is integral to the eligible dwelling. Such expenditures would include the cost of labour and professional services, building materials, fixtures, equipment rentals, and permits.
The following expenditures will not be eligible 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 (e.g. mortgage interest costs).
Furniture or draperies, and other indirect expenditures for items that retain a value independent of the renovation, such as the purchase of construction equipment (e.g. tools) will not qualify for the credit.
Expenditures will not be eligible if the related goods or services are provided by a person not dealing at arm’s length with the individual, unless that person is registered for Goods and Services Tax/Harmonized Sales Tax .
Other Information
The HRTC will not be reduced by any other tax credits or grants to which a taxpayer is entitled under other government programs. For instance, in the case of an individual who makes an eligible expenditure that also qualifies for the Medical Expense Tax Credit (METC), the individual will be permitted to claim both the HRTC and the METC in respect of that expenditure.
Any eligible expenditure claimed for the HRTC must be supported by receipts.
