The Home Renovation Tax Credit (Canada's Economic Action Plan 2009)
Jan 28, 2009 at 10:45 AM
You may download the PDF version of this article HERE.
Home renovations are smart investments in the long term value of
a home and also create economic activity by increasing the demand
for labour, building materials and other goods. Renovations can also
reduce energy consumption and the long-term cost of owning a home.
To provide some $3 billion of much-needed fiscal stimulus and
encourage investments in Canada’s housing stock, Budget 2009
proposes to implement a temporary Home Renovation Tax Credit (HRTC).
Temporary, Timely and Targeted Stimulus
The HRTC will apply to eligible home renovation expenditures for
work performed, or goods acquired, after January 27, 2009 and before
February 1, 2010, pursuant to agreements entered into after
January 27, 2009. The temporary nature of the credit will provide an
immediate incentive for Canadians to undertake new renovations
or accelerate planned projects.
The HRTC can be claimed for renovations and enduring alterations
to a dwelling, or the land on which it sits.
How the HRTC Will Work
The 15-per-cent credit may be claimed on the portion of eligible
expenditures exceeding $1,000, but not more than $10,000, meaning
that the maximum tax credit that can be received is $1,350.
The credit can be claimed on eligible expenditures incurred on
one or more of an individual’s eligible dwellings. Properties
eligible for the HRTC include houses, cottages and condominium units
that are owned for personal use.
Renovation costs for projects such as finishing a basement
or re-modelling a kitchen will be eligible for the credit, along
with associated expenses such as building permits, professional
services, equipment rentals and incidental expenses.
Routine repairs and maintenance will not qualify for the credit.
Nor will the cost of purchasing furniture, appliances, audio-visual
electronics or construction equipment.
Who Can Claim the HRTC?
About 4.6 million families in Canada are expected to benefit from
the credit.
Taxpayers can claim the HRTC when filing their 2009 tax return.
Eligibility for the HRTC will be family-based. For the purpose of
the credit, a family is generally considered to consist of
an individual, and where applicable, the individual’s spouse
or common-law partner.
Family members will be able to share the credit.
Examples of HRTC Eligible
and Ineligible Expenditures
Eligible
Renovating a kitchen, bathroom, or basement
New carpet or hardwood floors
Building an addition, deck, fence or retaining
wall
A new furnace or water heater
Painting the interior or exterior of a house
Resurfacing a driveway
Laying new sod
Ineligible
Furniture and appliances (refrigerator, stove,
couch)
Purchase of tools
Carpet cleaning
Maintenance contracts (furnace cleaning, snow
removal, lawn care, pool cleaning, etc.)
Examples of the Benefits of
the Home Renovation Tax Credit
The following examples illustrate how homeowners can
benefit from the HRTC
Sally and Ed are a couple who have recently
purchased a house. In response to the temporary HRTC, they decide to replace their old windows and
improve the insulation in their home in 2009,
instead of waiting, incurring $10,000 in
expenditures. After taking into account the $1,000
minimum threshold, a 15-per-cent credit will be
available on $9,000 in eligible expenditures,
providing tax relief of $1,350.
William and Marie are a couple who are
planning to purchase a more energy-efficient furnace
for their home, and build a deck at their cottage
sometime later. To take full advantage of the
temporary HRTC, they decide to do both projects in
2009 rather than waiting. They pay $5,000 for the
furnace and $3,500 for the deck. They also decide to
have the area around the deck landscaped for $2,500,
bringing their total costs to $11,000 ($5,000 +
$3,500 + $2,500). Marie claims a credit of $1,350 on
the maximum allowable amount of $9,000.
Karen and Heather are sisters who share
ownership of a condominium unit. They each incur
$7,500 in expenditures renovating the kitchen in the
condo. Karen and Heather each claim a $975 credit on
eligible expenditures of $6,500 ($7,500 - $1,000).
How Can I Get More Information?
Additional information on the Home Renovation Tax Credit will
soon be available on Canada Revenue Agency’s website at (www.cra-arc.gc.ca).
Copies of this brochure are available from the Department of
Finance or Service Canada:
Department of Finance Canada
Distribution Centre
Room P-135, West Tower 300 Laurier Avenue West
Ottawa, Ontario K1A 0G5 Phone: 613-995-2855
Fax: 613-996-0518
Service Canada
1-800 O-Canada (1-800-622-6232)
1-800-926-9105 (TTY)
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