The new Home Renovation Tax Credit can assist homeowners who are renovating their home. The tax credit amounts to 15% of qualifying expenditures, to a maximum tax credit of $1,350.
You claim the tax credit when you file your 2009 income tax return, and it is non refundable. This means that the tax credit is deducted from the taxes you owe, up to the lesser of the taxes owing and the eligible amount.
Criteria for qualifying renovations:
- Expenses must exceed $1,000 in qualifying expense, up to a maximum of $10,000. The tax credit is based on the expense in excess of $1,000, so the maximum is (10,000 – 1,000) x 15% = $1,350. Expenses can exceed $10,000, but only the first $10,000 qualify for the tax credit,
- Expenses must be for goods acquired or work performed between January 27, 2009 and February 1, 2010. If a contract was entered into before January 28, 2009, those expenses do not qualify.
- Renovations must be to an eligible residence – that is one that you, your spouse or common law partner, or your child (under 18) or your spouse’s child occupy as a principle residence. If a portion of the residence is rented or used for commercial purposes, renovations to that portion of the residence do not qualify. If you own and occupy more than one principal residence in the period, renovation expenses for all residences are eligible.
- You can do the work yourself or have family members do the work, however, expenses cannot include your labour, nor the labour or goods supplied by family members unless they are registered for GST.
- Expenses must be for additions or renovations to an eligible dwelling that are of an enduring nature and form part of the dwelling, or to the land that forms part of the dwelling. Expenses include the cost of professional fees and labour, fixtures, building materials, rentals and permits. This means that items such as appliances, furniture, electronics etc do not qualify, nor do routine maintenance expenses such as carpet cleaning and furnace service. Also, financing costs do not qualify.
- Expenses for renovations to the common area of condominiums and co-operative housing corporations will qualify.
- If the expenses qualify for both the Home Renovation Tax Credit and the Medical Expense tax credit, you can claim both credits for the same expenses.
- he Home Renovation Tax Credit is not reduced by other government grants or credits you may qualify for.
You do not have to include receipts and documents with your tax return to support the Home Renovation Tax Credit, but you need to keep everything in case Canada Revenue Agency requests it. Failing to supply documentation will lead to the tax credit being denied. Documents should show the name, address and GST number of the vendor, clearly describe the goods or services provided, include the location the work was done, show the date of delivery of goods or provision of services, the amount of expense, and show proof of payment.
If you perform any renovations to your residence, keep all the receipts and talk to your accountant at income tax time about claiming the Home Renovation Tax Credit.