Information Bulletin: Federal Government HRTC - The Home Renovation Tax Credit

The recently announced budget features a very useful credit for homeowners, The Home Renovation Tax Credit (HRTC). See below for the answer to some common questions on how it can be applied.

Federal Home Renovation Tax Credit

THE INFORMATION CONTAINED IN THIS SUMMARY HAS BEEN OBTAINED FROM THE BUDGET DOCUMENTS PUBLISHED BY THE FEDERAL GOVERNMENT AND IS BEING PROVIDED FOR THE CONVENIENCE OF OUR CUSTOMERS. THE FOLLOWING SETS OUT OUR UNDERSTANDING OF THE HRTC AND IS NOT MEANT TO BE RELIED ON OR TAKEN AS TAX OR LEGAL ADVICE. TO ENSURE THE ACCURACY OF THIS INFORMATION AND ITS APPLICATION TO YOU, PLEASE REVIEW THE DOCUMENTATION PUBLISHED BY THE GOVERNMENT AND, IF YOU REQUIRE FURTHER INFORMATION, PLEASE OBTAIN FROM YOUR OWN FINANCIAL ADVISORS. IN ADDITION, ALL OF THIS INFORMATION IS CONDITIONAL UPON THE BUDGET PROPOSALS BEING PASSED AND IS SUBJECT TO ANY CHANGES THAT MAY BE MADE BY THE GOVERNMENT.

What types of products, services and expenses will be eligible?

Eligible

Ineligible
All labour and material costs associated with:
  • new retaining wall, patio, or driveway
  • laying new sod
  • new or updating existing gardens
  • professional fees; and
  • permits
 Maintenance contracts
  • snow removal, lawn care, pool cleaning, etc.

How will the Home Renovation Tax Credit work?

Home Renovation Tax CreditsCanadian homeowners can claim a 15 percent, non-refundable tax credit for eligible expenditures of more than $1,000, but not more than $10,000 - for a maximum credit of $1,350 ($9000 x 15%). Based on information currently available the HRTC may be claimed in addition to support from the existing ecoENERGY retrofit program and the medical expense tax credit. Taxpayers can claim the HRTC when filing their 2009 tax return.

 


Examples:
  • James and Erica are a couple who have recently purchased a house. In response to the temporary HRTC, they decide to landscape their property with some raised garden beds and some new sod, rather than waiting, they incur $10,000 in expenditures this year. 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.
  • Sarah and Amy are sisters who share ownership of a condominium unit. They each incur $4,000 in expenditures to have a new interlock driveway and walkway leading to their front door installed. Karen and Heather each claim a $450 credit on eligible expenditures of $3,000 ($4,000 - $1,000).
When will the HRTC begin and end?
The HRTC will apply to eligible home renovation expenditures for work performed, or materials purchased, after January 27, 2009 and before February 1, 2010, pursuant to agreements entered into after January 27, 2009.
Who is eligible to participate, and what are the conditions?
Family members (spouses or common-law partners and their children under 18) are subject to a single limit based on their pooled expenditures. The credit is only available for a dwelling that is eligible to be the family's principal residence or that of one or more of their other family members.
What should you do?
Begin to save your receipts for any home improvement project that you are currently working on or plan to work on that qualify for the tax credit.