Bob Gardiner of our office has given the following quick summary of the nuts and bolts of the Home Renovation Tax Credit (“HRTC”) that was introduced as part of last week’s 2009 Federal Budget:
The HRTC will provide a 15% non-refundable tax credit to individuals for eligible expenditures in excess of $1,000 but not more than $10,000 made in respect of eligible dwellings. That will result in a maximum federal tax credit of $1,350 ($9,000 x 15%). The work must be performed between January 28, 2009 to January 31, 2010. The HRTC provides a single limit for each family consisting of an individual, spouse or common law partner and their children under age 18 throughout 2009.
An eligible dwelling consists of a person’s principal residence or the principal residence of one or more of the other family members. For condominiums and co-operative housing corporations, eligible expenditures will include the individual’s share of the cost of renovating common areas, in addition to costs to renovate the unit. Portions of a home used partly to earn business or rental income do not qualify, but the residential portion of a home can qualify for appropriate expenditures in respect of the personal-use areas. Expenditures made in respect of common areas or that benefit the housing unit as a whole such as re-shingling a roof, must be allocated between personal and income-earning use in order to determine the portion that qualifies for the credit.
The renovations must be of an enduring nature that are integral to the dwelling (or common elements), including expenditures for the cost of labour and professional services, building materials, fixtures, and equipment rentals and permits. However, routine repairs and maintenance typically performed on an annual or more frequent basis are excluded expenditures, as are expenditures for appliances, audio-visual electronics and financing costs. Furniture, draperies and other indirect expenditures that have a value independent of the renovation (such as construction equipment and tools) do not qualify. Goods or services must be provided by a non-arm’s length person supported by receipts and GST charges.
Click here to see Frequently Asked Questions about the HRTC on Canada Revenue Agency's website.
Click the picture to the left to view details about the HRTC on the Budget 2009 website.