What is the home renovation tax credit in Canada?
Canada’s home renovation tax credit has been subject to substantial interest as of late. People are spending more time at home and, as a result, looking to improve their residences while saving money.
Here’s what you need to know about the federal home renovation tax credit in Canada and how to save money on upgrades if you missed out.
Home renovation tax credit: Your ultimate guide
The federal home renovation tax credit (sometimes abbreviated as HRTC) was introduced for the 2009 tax filing year.
Homeowners who spent between $1,000 and $10,000 on eligible renovations between January 27, 2009 and February 1, 2010 received a 15% non-refundable tax credit on the portion of expenses exceeding $1,000. This meant households could receive up to $1,350 in credits.
Unfortunately, 2009 tax returns can no longer be amended; according to the Canada Revenue Agency (CRA), tax return changes as of 2020 must relate to 2010 or later. This means the federal home renovation tax credit isn’t something you can benefit from if you haven’t already done so.
There are still other programs you can use to save money on renovations, however. We’ll take a look at those shortly.
First, let’s explore eligibility for the tax credit. Even though you can’t apply for it anymore, it’s good to have some background information for putting those other programs into context.
Eligible expenses under the CRA home renovation tax credit
Under the CRA’s home renovation tax credit, eligible expenses included those which:
- Were incurred by the individual filing the return or a qualifying family member. This includes spouses.
- Related to an agreement signed after January 28, 2009. In other words, a renovation scheduled in 2008 or early January of 2009 would not have qualified.
- Involved renovations that substantially changed the house. This would include things like roof re-shingling, kitchen renovations, flooring replacement, insulation upgrades, new windows, water heaters, etc. Essentially, the renovations needed to be integral to your home.
As with most tax credits, however, the CRA did not request many details confirming eligibility at the time of filing. Rather, the agency would have asked to see receipts and documentation only if it was deemed necessary (i.e. during an audit).
Further, the statute of limitations on audits is generally four years unless the agency suspects fraud, according to Farber Tax Solutions.
Ineligible expenses under the home renovation tax credit in Canada
Aside from the restrictions related to dates, expenses ineligible for the home renovation tax credit would include:
- Most temporary/portable items. The home renovation tax credit was not intended to help Canadians save on furniture or other temporary household fixtures. Again, the intention was to offer savings on substantial renovations that make integral adjustments to your home.
- Tools and equipment. Tools (including those you may have used for the renovation) were not eligible expenses under the home renovation tax credit.
- Cleaning and maintenance services. You also weren’t able to claim cleaning and maintenance services (such as snow removal or housekeeping) towards the home renovation tax credit.
How to claim other home renovation tax credits
While you may be disappointed to learn that Canada’s home renovation tax credit is no longer available, there’s good news. Some of the country’s most populous provinces (including British Columbia and Ontario) have introduced their own renovation tax credits.
Let’s look at these programs and how you can claim them.
Ontario healthy homes renovation tax credit for seniors
Ontario’s Healthy Homes Renovation Tax Credit is refundable, meaning a credit exceeding your taxes owing for the year will trigger a payment from the government to you.
This is fitting since the credit, as its official name suggests, is geared towards seniors. To qualify, you must either be 65 years and up or live with someone who is.
The credit was available between the 2011 and 2016 tax years, offering a maximum of $1,500 per year as the 15% applies to the full amount.
The Ontario Healthy Homes Renovation Tax Credit comes with some additional stipulations. Eligible expenses are generally those that improve your home’s accessibility. These include:
- Bathroom reinforcements. You’re allowed to claim expenses such as bathtub grab bars and shower handrails.
- Wheelchair home modifications. This includes chair ramps and stairlifts.
- Safety features. If your home needs additional light fixtures, non-slip flooring, and other modifications designed to improve senior safety, those are covered expenses.
Notably missing from the list of qualifying expenses are those primarily intended to increase your home’s value. Expenses related to maintenance are also not permitted. These include:
- General home maintenance. This includes plumbing.
- Roof repairs.
- Aesthetic modifications.
- Installation of new water or HVAC systems.
Devices (including those meant for medical purposes) are also not eligible expenses under Ontario’s renovation tax credit.
Applying for Ontario’s renovation tax credit
If you incurred eligible expenses between 2011 and 2016 but did not claim Ontario’s tax credit, you may be able to amend prior returns. Get in touch with your accountant to verify eligibility and make those changes.
British Columbia’s home renovation tax credit for seniors and persons with disabilities
British Columbia’s renovation tax credit is refundable and has been ongoing since 2012. Eligible homeowners can receive a credit for 10% of qualifying expenses, up to a maximum of $1,000 per year.
As with Ontario’s credit, you need to either be 65 and older, live with someone who is, or have a disability. The disability clause was introduced as of February 17, 2016.
The primary purpose of the renovations must also be to make your home safer. That qualifies expenses such as:
- Walk-in bathtubs.
- Lowering countertops and cabinets.
- Widening doors.
- Placing lever handles on doors.
Ineligible expenses would include those similar in intention to Ontario’s exclusions; aesthetic modifications, home maintenance, and more.
Applying for British Columbia’s renovation tax credit
Because this tax credit is ongoing, you can claim it on eligible expenses incurred at any point after April 1, 2012. Keep in mind that the expenses must be attached to the specific year return in which they were incurred.
Further, some aspects of the program (such as those intended to help people with disabilities) were not introduced until later years. As such, you’ll need to work with an accountant to determine eligibility when claiming the credit retroactively.
Don’t qualify for home renovation tax credits? You can still save on renovations with Alpine Credits
As you can see, home renovation tax credits come with fairly strict eligibility requirements. If you don’t qualify for any of the credits we’ve discussed in this article, don’t panic! At Alpine Credits, we’ve been helping homeowners finance renovations responsibly for decades.
With a home equity loan from Alpine Credits, you’ll be able to cover renovation costs at very reasonable interest rates using the equity you’ve already built up in your home. The money is yours to use how you see fit, with no list of ineligible renovations to worry about.
While a loan is, of course, very different than a tax credit, competitive interest rates and monthly payments make our services every bit as useful to those who need a hand with paying for renovations.