Home Renovation Tax Credit
The Home Renovation Tax Credit (“HRTC”) was introduced in the federal budget tabled on January 27, 2009, and provides a tax credit for renovations to “eligible dwellings” (note that the HRTC is technically a budget proposal and does not yet have the force of legislation, nor have we seen proposed legislation at this time, although it is expected to pass).
Generally speaking, an “eligible dwelling” is a housing unit owned by an individual and ordinarily inhabited by the individual, the individual’s spouse or common-law partner, or their children. This means that any dwelling that you own and use personally could qualify, including your home or your cottage.
The HRTC is only available with respect to work performed or goods acquired after January 27, 2009, and before February 1, 2010.
Expenditures that qualify are those that are incurred as part of a renovation that is of an enduring nature and that is integral to the “eligible dwelling”. The HRTC provides a credit of 15% of the eligible expenditures. The HRTC applies to eligible expenditures of more than $1,000, but not more than $10,000, resulting in a maximum credit of $1,350 ($9,000 x 15%). The HRTC applies on a family basis (a family is eligible for the maximum credit of $1,350, not each member of the family). Receipts supporting expenditures should be retained.
Although no legislative language has been provided at this point, the Canada Revenue Agency (“CRA”) has provided the following guidance:
CRA Document 2009-0309581M4 provides that the following expenditures will be eligible for the HRTC.
- Renovating a kitchen, bathroom, or basement
- New carpet or hardwood floors
- Building an addition, deck, fence, or retaining wall
- Purchasing a new furnace or water heater
- Painting of the interior or the exterior of a house
- A new driveway or resurfacing a driveway
- Laying new sod
CRA Document 2009-0310361M4 confirms that any dwelling that an individual owns and uses personally could qualify, including a home and a cottage.
CRA Document 2009-0309591M4 clarifies that routine repairs and maintenance such as furnace cleaning, snow removal, lawn care and pool cleaning will not qualify for the HRTC, but that replacement of a roof will qualify. Replacement of a roof provides an enduring benefit and is integral to the “eligible dwelling”.
CRA Document 2009-0309491M4 states that work performed by electricians in the course of a renovation will generally be an eligible expenditure.
CRA Document 2009-0309611M4 confirms that expenditures relating to the installation of a new furnace will qualify for the HRTC.
Further guidance is available at http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhmrnvtn-eng.html.