Eligible Tax Deductions For Home Improvements

by Tax Guy - Burlington Accountant on February 1, 2011 Print This Post Print This Post

NOTE: The HRTC was only available for the 2009 tax year and is no longer available.

We have had many questions posted below as well as received by e-mail about the new Home Renovation Tax Credit.  We encourage you to continue to ask your questions!

Question: I wanted to know which of the costs we incurred improving our home would be eligible for tax deductions. We did most of the work ourselves but we purchased paint, wood trim, flooring, faucets, sinks, tile etc. We also purchased tools to perform the work. Is any of this deductible? Is there a limit to the amount we can deduct?

Thank you for your response.

In the federal budget presented January 27, 2009, the government announced a home renovation tax credit.

The credit will apply to expenditures in excess of $1,000, but not more than $10,000 than $10,000, resulting in a maximum credit of $1,350 ($9,000 x 15%) per family.  A family is generally an individual, a spouse or common law partner and their children who were, throughout 2009, under the age of 18 years.

Expenditures for work performed of goods acquired after January 27, 2009 and before February 1, 2010, will be eligible for the credit.

February 2011. The Home Renovation Tax Credit was only available or the 2009 tax year and is no longer available. Therefore, I have close the comments to this article.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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{ 116 comments }

Andy June 30, 2009 at 8:05 am

I have ordered work to be done this year (about $12,000) on my property. It qualifies for the grant. However both myself and my wife are not be returning to work this year. so we will not be able to pay any tax (no pay = no tax) How do we get the “tax credit” ?

Tax Guy June 30, 2009 at 9:36 am

@ Andy:

The HRTC will be a non-refundable tax credit. This means you need to have taxable income in the year. I also doubt the credit would be carried forward so I think you would lose the credit.

Note though that the government has not even drafted the legislation so making any conclusions about the credit is impossible.

Chris July 11, 2009 at 11:40 pm

So what the government is saying is if you’re a senior, on welfare, or WCB benifits (you know the low man on the totem pole) you don’t get anything back because you pay no income tax and it’s a non refundable tax credit. It just doesn’t sound right that if someone making 10-15,000 dollars a year needs to do a couple thousand dollars worth of work to their house they get no money back but if someone making 50,000 a year wants to do some unessessary landscaping they can get it. Wouldn’t it make more sense to make this a refundable tax credit? It just seems like alot of the poor are getting the shaft on this one and as usual the rich get richer.

Tax Guy July 12, 2009 at 12:14 am

@ Chris:

The credit was designed to have those with the money to spend it and kick start the economy.

By spending their money on renovations, they will employ trades people and the renovations will result in the purchase of materials. The materials means manufacturing and lumber processing jobs are maintained.

Steve Hanko July 15, 2009 at 8:03 am

Our townhouse complex replaced the perimeter fencing. Can each unit claim a portion of the cost? Do we need to get the company provide us with individual receipts or can we use the lump sum bill and divide it by 18 units?

Tax Guy July 15, 2009 at 2:49 pm

@ Steve:
As I understand it, you are correct.

See

Kathleen Kidd July 22, 2009 at 10:13 pm

Does the tax credit apply only to large renos. or can it include a number of smaller projects?

Tax Guy July 23, 2009 at 7:37 am

@ Kathleen:

The credit applies to any renovations done during the year. Keep your receipts for eligible purchases as well as invoices from any contractors.

S. Prest July 26, 2009 at 12:36 pm

I am renovating a home that I currently rent to another family which will eventually become my principal residence. Are the renovations, (which will be completed in 2009) to this home eligible for the government rebate?
Tks,
Steve

Tax Guy July 26, 2009 at 9:20 pm

@ Steve:

You can only claim the credit if the property is your principal residence. In your case it would be unlikely the CRA would accept the claim.

A M August 7, 2009 at 9:04 am

Hi,
I am an adult living with my mother, who owns the house. Would I be able to claim a separate credit as well, as I am not a dependant?
Thanks,
AM

Tax Guy August 7, 2009 at 10:04 am

@ A M:

To claim the credit you must own the proeprty and it must also be your principal residence.

Carole English August 29, 2009 at 1:02 pm

I had a new well dug on my acreage which is used as my primary water usage. the old one had caved in. Does this qualify for a tax credit?

Tax Guy August 31, 2009 at 8:30 am

@ Carole:

A well would probably qualify.

Ben Nguyen August 29, 2009 at 2:48 pm

Hi Taxman.

I have 5-plex which I live in one of 5. I did renovation the full bathroom inthe basement of my apartment and still doing renovation on the basement for the hometheatre, plus I have Cost-co to change 4 entrydoors of the 5-plex. Am I eligible to claim credit for the that I did my basement? And the one for the 5-plex?

Ben Nguyen

Tax Guy August 31, 2009 at 8:31 am

@ Ben:

If you own the 5-plex and the unit you liv in is your principal residence then you may only claim work done on your unit and 1/5th of common area work.

gordie states September 8, 2009 at 6:34 pm

i have to put a stainless steel liner in my chimney ,is this covered under the home reno tax credit?

Tax Guy September 8, 2009 at 8:04 pm

@ Gordie:

Probably, but remember you’re total eligible expenses must be more than $1,000.

Derek September 16, 2009 at 10:21 pm

Can you please clarify something for me? I’ll use an example…if I spend $5000 now on an eligible expense, then I can get a $600 non-refundable tax credit ($5000-$1000 base amount x 15%), which will be added to my other federal non-refundable tax credits on line 350 of my 2009 tax return. So, then that will be deducted from my net federal tax owed. So, let’s say my net federal tax would have been $6600, now it would be reduced to $6000, correct? My question is if I was already entitled to a tax refund because my income tax deducted throughout the year exceeded my tax owed, would I still receive the $600 tax credit. I should be eligible to receive it if my net federal tax exceeds my non-refundable tax credits, correct, regardless of what tax was deducted from me throughout the year?

Tax Guy September 17, 2009 at 7:37 am

@ Derek:

The HRTC is an additional credit that will reduce the amount of tax you pay. If you overpaid your tax during the year you’d get a refund.

In the example, I’ll assume you have no other income other than T4 income and had $6,600 deduced and reported on your T4. If we also assume the $6,600 was equal to the tax you would have owed before claiming the HRTC, you’ll get a $600 refund for claiming the HRTC.

I hope this helps!

megan October 2, 2009 at 10:59 am

We own one house and just bought another. We are renovating the second but it will not be our primary house. Can we still collect the home renovations tax credit?

Also, if you are renting a property and doing renovations on the rented property, can you claim the home renovations tax credit?

1 last thing: If my husband’s name is on the title of the house but his father is a partner in the second house and is the primary dweller of the house, how does the collection of the home renovation tax credit work then?

Thanks in advance

Tax Guy October 2, 2009 at 1:56 pm

@ Megan:

The HRTC is available only on your principal residence. The principal residence is essentially the home your “family” ordinarily occupies. This being said, the property must be wholly or partly owned by the occupant and they need to live there.

It would appear that the HRTC would not be available on the second house.

Ken MacCarl October 9, 2009 at 6:09 am

I have recently installed a heat pump. I will get a 400 dollar rebate from the cool savings program, also a 1500 dollar rebate through another progam. What figure do I claim for my HRTC. The cost of the unit was 6000 dollars. Do I claim the full amount, or only 4100 dollars. Also, the house is in the name of my common law partner, but I put out all the money. Who should claim the credit?

Tax Guy October 9, 2009 at 7:16 am

@ Ken

The Home Renovation tax Credit and ecoEnergy Retrofit home grant programs are separate programs. The HRTC has been set up so that you can take advantage of both programs.

Your heat pump cost you $6,000 and will permit you to claim the HRTC of $750 (provided the heat pump is fixed and permanently installed). In addition you can claim grants under the ecoEnergy Retrofit home grant program.

I hope this helps.

greg sheehan October 13, 2009 at 3:40 pm

In previous posts you have stated that if the renovation work is intiated prior to February 1, 2010, you would be eligible for the credit. Revenue Canada, however, has advised me that the work must be completed and paid for before February 1, 2010 with documentation to confirm. So even if you have entered into a renovation contract after January 27, 2009 and there is a completion date prior to February 1, 2010, if the work is delayed beyond that date, for any reason, even if paid for, you are out of luck.

Tax Guy October 14, 2009 at 11:36 am

@ Greg:

Can you provide the link? I’ve reviewed each of the articles and only made a slight wording change to one but was unable to locate where I said the work must be initiated before February 1st.

Steve November 25, 2009 at 9:24 pm

Dear Tax Man,
My wife and I bought a house this, and have done a number of projects including replacing a number of the floors and upgrading the heating/cooling system. I am quite certain that the heating/cooling system is eligible because we had the work done by a contractor, however the flooring was performed by my step father and I. Would the flooring (cost about $2000) still be eligible?

Tax Guy November 26, 2009 at 9:26 am

@ Steve:

Generally speaking the cost of the flooring would qualify provided you acquired the materials from a supplier registered for the GST.

Brent March 23, 2010 at 9:10 am

All of those expenses are eligible except for tools.

Flyguy April 28, 2010 at 9:35 pm

Do you think a central vacuum system would be eligible?

Tax Guy April 29, 2010 at 12:03 pm

Flyguy:
Probably, assuming it was purchased during the eligibility period.

UPDATE: See comment #34 – The central vacuum is NOT eligible for the HRTC.

Flyguy April 29, 2010 at 4:14 pm

I know appliances are not eligible, but I wouldn’t consider this an appliance (like a stove, fridge or microwave).

Tax Guy April 29, 2010 at 8:11 pm

Flyguy:
Your furnace is eligible and is an integral part of your home. So the built in vacuum would be as well.

Tax Guy May 19, 2010 at 1:29 pm

UPDATE: See comment #34 – The central vacuum is NOT eligible for the HRTC.

Tax Guy May 19, 2010 at 1:28 pm

Flyguy,
I just saw a letter come from the CRA on this topic. They do not consider a central vacuum eligible for the HRTC. Based on the definition of eligible expenditures, I disagree with their assessment. However, is it worth the fight?

Michael January 29, 2011 at 2:47 pm

Can I claim $ 18,000 new windows /a patio door in T4 tax ?

Brent January 30, 2011 at 12:07 pm

Michael this comment does not make sense. What do you mean T4 tax? The HRTC has nothing to do with T4s. If the windows are for 2009, you can send in the claim if you paid it in the eligible 2009 period. There is no HRTC claim for 2010.

Tax Guy January 31, 2011 at 11:01 am

Brent,
Ignoring the T4 portion, I assumed he was asking if the HRTC was available for 2010.

Tax Guy January 31, 2011 at 11:01 am

Michael,
The home renovation tax credit was only available for the 2009 tax year. If you incurred the cost for the eligible period, then yes it would qualify.

Dave February 6, 2011 at 11:50 am

The Home Reno Tax credit for 2009 says it is to maximum of 10,000.
If my kitchen reno was 12,000 i’m assuming they will allow me up to the 10,000.
I filed my 2009 but bid not request the credit. Is it to late to request it now? Can i do it online at CCRA – change my return or do i have to send a letter requesting them to amend my return and apply this credit?
Dave

Tax Guy February 7, 2011 at 7:55 am
Eleanor Kubish February 10, 2011 at 9:22 pm

I spent $3000 on new windows for my home in Nov/09. Can I apply for the tax credit this year (2011)?

Tax Guy February 11, 2011 at 4:34 pm

Unfortunately, no. The tax credit is only available for the 2009 tax return. If you did not claim it for 2009, then you can file an amendment.

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