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.
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We are planing to renew our driveway this summer with concrete cement. We will hire a company to do it. Will the driveway cost be eligible for tax credit?
Thank you
Melinda
@ Melinda:
Yes it would.
Our strata condo is having a new roof installed this summer.
A special levy is to be paid by all owners in the complex.
Is my share of this expense eligible for the credit?
If the cost are shared on common areas, then the cost is deductible.
See http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhmrnvtn-eng.html#q10
Has this actually passed parliamentary assent? I can find no evidence that it has and more evidence that it’s still just a proposal. Note the wording of this website that is dated May 6/09.
http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhmrnvtn-eng.html
@ Jill
Bill C-10 passed and received Royal Assent March 12, 2009.
See the attached link:
http://www2.parl.gc.ca/Sites/LOP/LEGISINFO/index.asp?Language=E&List=list&Type=0&Chamber=C&StartList=2&EndList=200&Session=22
I don’t see anything in Bill C-10 that specifically refers to the HRTC. I haven’t read the document end to end but there are no headers mentioning the HRTC whereas there are ones for TFSA, the infrastructure stimulus fund etc. I’m not trying to belabor this but it might impact how we do some home renos this summer.
@ Jill:
I’ve looked at the bill and it was not passed. However, the CRA has a longstanding policy of implementing proposed legislation. If the current government falls, it would be political suicide for any subsequent government to not pass this legislation.
Thanks.
I need to clarify how this credit will actually work.
Let’s say for argument’s sake I spend $8,000 on a new driveway and deck.
After taking away $1000, the remaining portion eligible for the tax credit is $7,000, right?
Now, next year, when I have to enter an amount into the non-refundable tax credit portion of the return
( the new line), do I enter $7,000, or 15% of $7,000?
This year for example, my total amount of
non-refundable tax credits was $18,000. Now, if we had
had this new home renovation tax credit available
this year, would the amount I would enter be $7,000,
thereby increasing my total amount of
non-refundable tax credits to $25,000? And then the
calculation would be 15% of that amount? Or would
the $7,000 have to be scaled back 15%, then entered
into the new line? Confusing, sorry about that. But
the implications tax-wise are enormous.
Thanks
You spend $8,000 on a new deck and this increases your non-refundable tax credits by $1,050 ($7,000 x 15%). You may also be entitled to provincial credit if they have passed similar legislation.
I am a single parent with two boys at home, the younger will be 18 in June. I need to replace the shingles on my house and garage this summer. The comments above indicate that, because I don’t have a spouse and my son turns 18 this year, I cannot claim this deduction and am not eligible for this credit??
@Hilka:
Your martial status does not affect your eligibility to claim this credit. The property must be your principal residence and the work must be enduring in nature. Further, the work must be iniated or materials purchased after January 27, 2009 and before Feb 1, 2010. Shingles on a garage would qualify.
Our summer cottage needs a new roof over screened patio room
does these deductions qualify under the home renovation program
@ Robert:
A new roof would qualify. See: http://www.cra-arc.gc.ca/tx/ndvdls/sgmnts/hmwnr/hrtc/lgbl-xpns-eng.html
We live in a bungalow condominium complex (33 individual condos around a large “cul’ de’ sac”). Five of our roofs are being replaced this year, including our unit; the cost is being paid from the legally required reserve fund, to which each of the 33 unit holders contribute equally annually. May I use my portion ($5,000.00) of the total cost as a personal tax credit for home improvement? Or must the total cost ($25,000.00) be divided by all the 33 members? Secondly, do I need to return my credit to the reserve fund?
@ Bill:
According to the CRA, your share of the actual cost would be the amount that you would claim. If your cost is $5,000 then this is the amount you claim.
Since this is your cost, there would be no need to provide yur credit back to the condo corp.
My strata complex recently passed a levy for a new roof, with the work being done this summer/fall.
I’m in the process of selling my unit and I as the current owner will pay my share of the levy, but the new owner will be living in the unit during the roof renovations and when the roof is complete.
Thus the unit will cease to be my principal residence before all the renovation work is done and before the end of the 2009 tax year.
I understand such work on strata properties is covered (and amount to be paid is at least $1,000), but I’m wondering if I am eligible for the home renovation tax credit in this case?
Does the change in my principal residence affect my eligibility?
Also would I be eligible for another HRTC on my new principal residence (or only balance remaining, if any, up to $10,000)?
Thanks in advance for your advice.
@ Colleen:
The way the CRA has the information worded: The credit will be based on eligible expenditures for work performed or goods acquired after January 27, 2009, and before February 1, 2010.
The use of the term “for” indicates to me that the credit would be based on expenses for the work. As long as you incurred the expense at the time you were the owner, this should qualify for the credit.
I want to install a heater on my pool. Does that qualify for the Renovation Tax Credit?
@ Lori Anne:
In my opinion yes the pool heater would qualify!
I have had a new 12,000 btu ductless AC system installed to replace the old window AC unit that we have been using. Does this qualify for a home improvement tax credit? The cost of the new unit was $2450.00 installed.
@ John D:
The unit must be fixed and enduring in nature. If the unit is a plug in unit it is unlikely it would qualify.
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” ?
@ 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.
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.
@ 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.
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?
@ Steve:
As I understand it, you are correct.
See
Does the tax credit apply only to large renos. or can it include a number of smaller projects?
@ Kathleen:
The credit applies to any renovations done during the year. Keep your receipts for eligible purchases as well as invoices from any contractors.
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
@ 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.
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
@ A M:
To claim the credit you must own the proeprty and it must also be your principal residence.
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?
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
@ Carole:
A well would probably qualify.
@ 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.
i have to put a stainless steel liner in my chimney ,is this covered under the home reno tax credit?
@ Gordie:
Probably, but remember you’re total eligible expenses must be more than $1,000.
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?
@ 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!
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
@ 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.
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?
@ 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.
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.
@ 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.
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?
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