Morgan Rice

Home Renovation Tax Credit

1. What is the Home Renovation Tax Credit (HRTC)?
The proposed HRTC is a non-refundable tax credit for work performed or goods acquired in respect of an eligible dwelling.

2. What is meant by eligible dwelling?
An eligible dwelling is a housing unit that is eligible to be an individual's principal residence or that of one or more of their family members, at any time between January 27, 2009 and February 1, 2010. In general, a housing unit is considered eligible to be an individual's principal residence where it is owned by the 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.

3. What is the eligibility period?
The credit will be based on eligible expenditures for work performed or goods acquired after January 27, 2009, and before February 1, 2010. Expenditures incurred pursuant to an agreement that was entered into before January 28, 2009, will not be eligible for the credit.

4. Who will be eligible for the credit?
Eligibility for the HRTC will be family based. A family will generally be considered to consist of an individual or an individual and his or her spouse or common-law partner, including children who will be under 18 years of age, at the end of 2009. A family will be allowed a single credit that may be shared within the family.
If two or more families share the ownership of an eligible dwelling, each family will be eligible for their own separate credit (i.e. each up to $1,350) that will be calculated on their respective eligible expenditures.

5. How will the credit be calculated?
The credit will only be available for the 2009 tax year and 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%).

6. What are eligible expenditures?
To be eligible, expenditures incurred in relation to a renovation or alteration to an eligible dwelling (or the land that forms part of the eligible dwelling) must be of an enduring nature and integral to the dwelling, and includes the cost of labour and professional services, building materials, fixtures, rentals, and permits.
Eligible expenditures must be supported by acceptable documentation.
Some businesses or individuals may assert that certain items qualify for the HRTC. It is important to remember that the individual taxpayer making the claim on their tax return is responsible for ensuring that all eligibility requirements are met.

7. What does the CRA consider to be acceptable documentation?
Documentation, such as agreements, invoices, and receipts, must clearly identify the type and quantity of goods purchased or services provided, including, but not limited to, the following information:
information that clearly identifies the vendor/contractor, their business address and, if applicable, the GST/HST registration number;
a description of the goods and the date when the goods were purchased;
The date when the goods were delivered (keep your delivery slip as proof) and/or when the work or services were performed;
A description of the work performed including the address where the work was performed;
the amount of the invoice; and
proof of payment.  Receipts or invoices must indicate paid in full or be accompanied by other proof of payment, such as a credit card slip or cancelled cheque.
Please consult our Underground Economy Web page, for tips to protect yourself when hiring a contractor.
To verify whether someone is registered for GST/HST, please consult the GST/HST Registry.

8. If I own both a house and a cottage and incur eligible expenditures for both, are both sets of expenditures eligible for the HRTC?
If you own and use your home and cottage personally, eligible expenditures incurred for both properties will normally qualify for the HRTC. Please note that the maximum amount of eligible expenditures you can claim in respect of the HRTC is $10,000 per family.

9. I am planning to replace my windows in 2009: can I hire my brother-in-law to help me out and still be eligible?
It depends. Expenditures will not be eligible if the related goods or services are provided by a person not dealing at arm's length with the individual, unless that person is registered for the Goods and Services Tax/Harmonized Sales Tax under the Excise Tax Act. So, in your case, if your brother-in-law is registered for GST/HST and if all other conditions are met, the expenditure will be eligible for the credit.

10. Will expenditures for the common areas of condominiums and co-operative housing corporations qualify for the credit?
In the case of condominiums and co-operative housing corporations, the individual's share of the cost of eligible expenditures for common areas will qualify.

11. I rent out my basement. If I renovate the basement for my tenant, will I be allowed to claim the credit?
No. Individuals who earn business or rental income from part of their principal residence will be allowed to claim the credit only for expenditures made for the personal-use areas of the residence.
For expenditures made for common areas or that benefit the housing unit as a whole (such as re-shingling a roof), you must divide the expense between personal use and income-earning use. For further information, please consult the Business and Professional Income Guide or the Rental Income Guide, as applicable.

12. If an eligible expenditure also qualifies for the Medical Expense Tax Credit (METC), will I be allowed to claim both the HRTC and METC?
Yes. Where an eligible expenditure qualifies for the METC the individual will be permitted to claim both the METC and the HRTC for that expenditure.

13. Will the credit be reduced by other government grants or credits that I may receive for the same expenditures?
No. Eligible expenditures will not be reduced by other government tax credits or grants that the individual may be entitled to.

14. Does work performed by electricians, plumbers, carpenters, architects, etc. qualify?
Generally, work performed by electricians, plumbers, carpenters, architects, etc. in respect of an eligible expenditure will qualify. See below for examples of eligible expenditures. If you're planning on hiring a contractor to do construction, renovation, or repair work on your home, the Get it in Writing! Web site has information that will help you.

15. Could you provide me with some examples of eligible and ineligible expenditures? 
See Examples of eligible and ineligible expenses.

16. What types of expenditures will not qualify?
The following expenditures will not be eligible for the HRTC:
the cost of routine repairs and maintenance normally performed on an annual or more frequent basis;
expenditures that are not integral to the dwelling, and other indirect expenditures that retain a value independent of the renovation;
expenditures for appliances and audio-visual electronics; and
financing costs.

17. Do I have to submit any supporting documents with my income tax return?
No. However, you must ensure that this information is available, should it be requested by the CRA.

18. How will I claim the HRTC?
A new line will be incorporated in the 2009 personal income tax return to allow you to claim the credit.

19. Where can I get more information about this new tax credit?
For further information, call CRA's individual income tax enquiries service at 1-877-959-1-CRA (1-877-959-1272).

20. The Budget also mentions the ecoENERGY Retrofit – Homes grant. What is it and how can I obtain more information?
The ecoENERGY Retrofit – Homes grant is administered by Natural Resources Canada. The grant applies to a host of measures that reduce energy consumption and provide for a cleaner environment. Home and property owners could be eligible for federal grants of up to $5,000 to offset the cost of making energy efficiency improvements to their home or property. Most provinces and territories have complementary programs that offer additional financial assistance based on the results of the ecoENERGY Retrofit evaluation. For information on how you can qualify, please consult the ecoACTION Web site.

Eligible and ineligible expenses The expenses are eligible when they are incurred in relation to renovations or alterations to an eligible dwelling (or the land that forms part of the eligible dwelling) and are permanent in nature. As a general rule, if the item you purchase will not become a permanent part of your home or property, it is not eligible. There are items, however, that have been explicitly excluded (see below).
Due to the large number of expenses that can qualify, it is not possible to provide a complete list.
Note
Some businesses or individuals may assert that certain items qualify for the HRTC. It is important to remember that you are responsible for ensuring that all eligibility requirements are met when you claim this credit on your tax return.

Examples of eligible expenses:
Renovating a kitchen, bathroom, or basement
Windows and doors
New carpet or hardwood floors
New furnace, boiler, woodstove, fireplace, water softener, water heater, or oil tank
Permanent Home ventilation systems
Central air conditioner
Permanent reverse osmosis systems
Septic systems
Wells
Electrical wiring in the home (e.g., changing from 100 amp to 200 amp service)
Home Security System (monthly fees do not qualify)
Solar panels and solar panel trackers
Painting the interior or exterior of a house
Building an addition, garage, deck, garden/storage shed, or fence
Re-shingling a roof
A new driveway or resurfacing a driveway
Exterior shutters and awnings
Permanent swimming pools (in ground and above ground)
Permanent hot tub and installation costs
Pool liners
Solar heaters and heat pumps for pools (does not include solar blankets)
Landscaping: new sod, perennial shrubs and flowers, trees, large rocks, permanent garden lighting, permanent water fountain, permanent ponds, large permanent garden ornaments.
Retaining wall
Associated costs such as installation, permits, professional services, equipment rentals, and incidental expenses
Fixtures - blinds, shades, shutters, lights, ceiling fans, etc.

Note
Window coverings, such as blinds, shutters and shades, that are directly attached to the window frame and whose removal would alter the nature of the dwelling are generally considered to be fixtures (i.e., has become part of the home) and therefore would qualify for the HRTC. In some circumstances, draperies and curtains may qualify for the HRTC, if they would not keep their value or usefulness if installed in another dwelling. If these qualifying criteria are not met, it is likely that draperies and curtains would not qualify for the HRTC.
Examples of ineligible expenses
Furniture, appliances, and audio and visual electronics
Purchasing of tools
Carpet cleaning
House cleaning
Maintenance contracts (e.g., furnace cleaning, snow removal, lawn care, and pool cleaning)
Financing costs
Work performed by electricians, plumbers, carpenters, architects
Generally, work performed by electricians, plumbers, carpenters, architects, etc. in respect of an eligible expense qualifies. If you're planning on hiring a contractor to do construction, renovation, or repair work on your home, the Get it in Writing! Web site has information that will help you.
Family member hired for renovations

Expenses are not eligible if the goods or services are provided by a person related to you, unless that person is registered for the Goods and Services Tax/Harmonized Sales Tax under the Excise Tax Act. If your family member is registered for GST/HST and if all other conditions are met, the expenses are eligible for the HRTC.

Information Provided By:

Canada Revenue Agency

www.cra.gc.ca