Eligible Tax Deductions For Home Improvements

by Tax Guy on February 1, 2011 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.

Tax Admin February 9, 2009 at 12:29 pm: A fence would qualify as an eligible renovation under the home renovation tax credit as long as the fence was added to your principal residence.
You should also be aware that this a tax credit and not a deduction. The credit on your federal income tax is 15% of eligible renovations that are in excess of $1,000 but not more than $10,000.
If you build a fence that cost you $1,250 total, your tax credit (which reduces your taxes payable) will be $37.50 ($250 x 15%).

Lina Marino February 13, 2009 at 3:43 pm

We are in need of a new roof on our house,
is this considered an elegible renovation
for the tax deduction program?
Lina Marino

Tax Admin February 13, 2009 at 5:29 pm: A new roof is an eligible expense.

Dennis Ilic February 19, 2009 at 3:02 pm

Would landscaping be eligible for a tax credit? New gardens, sod, stone patio, retaining walls, labour, etc.? Is anything excluded in this field?

Tax Admin February 19, 2009 at 3:15 pm: Yes. Landscaping is an eligible expense.
Take a look at the CRA’s Q&A on the topic. Question 13 has a chart showing what is covered and what is not.

Chris D. February 21, 2009 at 8:46 pm

We want to build a playroom in our barn and possibly do some other barn upgrades. Are these an eligible expense?

Tax Admin February 22, 2009 at 12:16 pm: To use the credit, the renovation must be on your principal residence. Normally a barn is not considered the primary or principal residence.
See http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhmrnvtn-eng.html

Efthalia February 26, 2009 at 5:43 pm

A couple of questions
a) is this a yearly credit – so you can claim up to $10k per tax year – based on work performed
b) would upgrading/enhancing our insulation in our home qualify?

thank you

Tax Admin February 26, 2009 at 9:22 pm: @ Efthalia,
This is a one-time only credit to stimulate the economy and is only available for work that begins or good purchased after Jan, 27 2009 through Feb 1, 2010.

Ronald Vandenbroucke February 27, 2009 at 4:31 pm

I had a new furnace and air conditioner installed last year (2008)under a rental agreement. However, this year (2009), I decided to end the rental agreement and purchase them both outright. Would this be eligible for the Home Renovation Tax Credit.

Tax Admin February 27, 2009 at 11:04 pm: @ Ronald
Based on my read of the proposed legislation, I would say not. The explanatory notes read as follows:
Expenditures will qualify for the HRTC if they are incurred in relation to a renovation or alteration of an eligible dwelling (including land that forms part of the eligible dwelling) provided that the renovation or alteration is of an enduring nature and is integral to the eligible dwelling.
The alteration or renovation in your case actually occurred before the credit was introduced.

L. Rutherford February 28, 2009 at 7:07 pm

Would building a garage qualify for this tax credit?

Tax Admin February 28, 2009 at 8:29 pm: @ L. Rutherford
If the garage would be part of your principal residence then it would qualify for the credit, provided the work started after January 27, 2009 and before February 2, 2010.
Generally, your principal residence includes up to 1/2 acre of your property.

Wendy March 7, 2009 at 10:59 am

I just finished my kitchen renovation of less than 10,000 but bought part of the materials through Ikea. The first and biggest receipt for the kitchen was dated January 10th 2009 with possibility to return Feb., 24th,09. I have had to return & exchange certain things since then. Would this part still be eligible?
Do I have to submit a form before filling out my income tax for 2009 as I’ve heard we have to hurry before they run out of money going to be used for this?
I know I have to keep all receipts. Thankyou.

Tax Guy March 7, 2009 at 5:03 pm: @ Wendy
The home renovation tax credit covers contracts started or material purchased after January 27, 2009 but before Feb 1, 2010.
Unfortunately, you missed the eligibility period (as did I!).
See the attached.

mike March 13, 2009 at 2:11 pm

When this home renovation tax credit will be starting?

Tax Guy March 13, 2009 at 5:33 pm: The credit will apply to any renovation that begins after Jan 27, 2009 but before Feb 1, 2010.

Andy March 14, 2009 at 11:43 am

This is a tax credit.I am not clear on the meaning. Does it mean (a)that your tax acct is credited (on your tax return) or are (b)you sent a cheque?
If you are unemployed = no income tax paid so (a) does not work at all .Hence the newly (83,000)unemployed that lost their job last month would be SOL. However if you are simply sent a cheque then we all qualify.
Thanks

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