Homes - Renovating

Home renovation tax credit 101

Everything you need to know to understand the new Home Renovation Tax Credit.

Home improvements during an economic recession? And an ever-softening real estate market? Are you kidding?

The Canadian government's 2009 Home Renovation Tax Credit (HRTC) may just be the stimulus homeowners need to get back into the home improvement game. With tax credits of up to $1,350, beleaguered homeowners can get some relief when they take on eligible fixer-upper projects totaling $1,000 to $10,000 between now and the taxation year ending February 1, 2010.

As with anything in life, however, there’s some fine print. waded through it so you won’t have to. Here’s what you need to know to cash in on the HRTC largesse.

Who qualifies?
Homeowners. (Sorry, tenants.)

Eligibility for the HRTC is family-based. "Family" is defined as you, your spouse or common-law partner and/or your kids. That means even if your home reno projects total over $15,000, for example, you can't claim the first $10,000 then have your spouse or child claim the remaining $5,000. (Why would an 18-year-old pay for new pot lights, anyway?) The maximum HRTC claim per family household is $10,000 and the maximum credit per family household will be $1,350.

However, if you co-own a house with another family (even your own extended family) that also resides in it (you bought a house with your brother and sister-in-law, say, and have separate units), each family can put in their own $1,000 to $10,000 claim for their own respective projects.

What properties qualify?
Your primary residence and cottage. Investment properties don't qualify. You can claim up to $10,000 for renovations done to your home and cottage combined but not $10,000 each.

What home improvements qualify?

The HRTC covers expenditures related to home improvement projects of a lasting nature. This covers both the interior and exterior of your house, as well as your lot.

Some examples of acceptable projects include:
• Renovating your kitchen or bath
• Installing new flooring
• Painting the interior or exterior of your home
• Building an extension, garage, deck, storage shed or fence
• Re-shingling the roof
• Putting in a new furnace or water heater
• Installing a fireplace
• Resurfacing your drive
• Laying new sod
• Replacing lighting fixtures and ceiling fans

What expenses are covered?
Acceptable expenditures for these projects above include:
• Goods (paint, building materials, fixtures, etc.),
• Services (labour, design consults, etc.)
• Rentals (renting a paint sprayer or nail gun, etc.)
• Permit fees

You'll need receipts for everything. Store receipts must be itemized, bear the date, plus the store’s company name, address and GST/HST number.
Professional invoices and service agreements also need to be dated, detail the work done and associated costs, cite the address on which work was performed and provide the service provider's company info (and GST number).

Invoices must be marked as paid in full and additionally, you must attach proof of your payment: a cancelled check or credit card slip.

This article is featured on Budget-friendly home makeover ideas

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