Canada is a country with a high standard of living. However, this has some downsides, such as the high cost of living and taxes. When it comes to taxes, you might be able to claim some home renovation expenses provided that you met certain conditions.
Your home renovation expenses might include the costs for materials and services for renovating your primary residence. If you figure out whether or not these conditions apply to you, you can save a pretty deal while filing your taxes this year.
If you’re interested in claiming these expenses on your taxes, you’ll need to know how to calculate the amounts before you can file them. For more information about home renovation tax credit in Canada, you can visit https://alpinecredits.ca/home-renovation-tax-credit-canada/.
What is a home renovation tax credit?
According to the Canada Revenue Agency, a renovation is “any alteration made to a building that materially increases its value or utility.” It means that a renovation can be anything from replacing outdated electrical wiring in the basement to adding an extra story to your home.
In Canada, you can become eligible for a home renovation tax credit if you make a renovation that caters explicitly to improving the life of a person living with a disability on the property. It is more prominently known as home accessibility tax credit or HATC. The rules may, however, differ from one province to another.
Can you claim renovation expenses?
If you’ve incurred renovation expenses towards home improvement to enhance the accessibility for an elderly or disabled person, you can claim home accessibility tax credit from the government of Canada.
The home accessibility tax credit allows you to claim credit of up to $10,000, which is non-refundable.
However, you must own the property at least partially to qualify for the claim. Provided that you meet the above criteria, you will become eligible to deduct the costs of plans, permits, and materials.
Following are the criteria of the Canadian government to determine if a home renovation qualifies for a tax credit. But again, this is subject to the province you live in.
- The renovation aims to reduce the potential risk of harm to an elderly or disabled person living on the property.
- The renovation facilitates an elderly or disabled person living on the property to be more mobile within their homes.
- The individual must be at least 65 years old or eligible for the disability tax credit at any time during the corresponding tax year of filing the claim.
Understand what qualifies as a home renovation
While home renovation tax credit can help you save a great deal, it is essential to understand what expenses qualify for it. It will allow you to strategically invest in home improvements and plan your budget accordingly while saving on taxes.
Here’s what generally counts eligible for claiming HATC:
- Balance bars, handrails, etc.
- Motion sensor lights
- New locks on doors
- Countertops/ lowering countertops
- Non-slippery floors
- Wheelchair ramps and elevators
- Door widening
It will also help if you keep in mind that the following repairs and renovations do not qualify for HATC:
- Aesthetic renovations and landscaping
- Upgrading appliances
- Changing insulations
- Walkers, wheelchairs, etc.
- Smoke alarms
- Windows, roofing, flooring, etc.
Claiming Home Renovation Expenses on Taxes in Canada
The home renovation tax credit allowed the homeowners who have spent between $1000 and $10000 to get a non-refundable tax credit of a whopping 15% during 2009-10! However, it was subject to the eligibility of the homeowner.
Here’s what it required-
- You must be eligible for a home renovation tax credit.
- The combined total of all expenses (materials, labour, and renovations) must not be more than $10,000.
- If your renovation isn’t certified by an architect or engineer, you won’t be able to claim the credit for expenses incurred.
- You will be required to submit receipts for expenses incurred during the renovation.
Unfortunately, the home renovation tax credit is no longer available in Canada. But the good news is that you can still go for provincial renovation tax credits. Here’s a brief discussion on renovation tax credits from the most populous Canadian provinces, i.e., British Columbia and Ontario.
Ontario healthy homes renovation tax credit for seniors
To be eligible for Ontario’s healthy homes renovation tax credit for seniors, you have to be at least 65 years old or live with someone who qualifies for it. The renovation tax credit is refundable, meaning that if the credit exceeds your taxes during a tax year, you’ll be eligible to get payment from the government.
Ontario’s healthy homes renovation tax credit was available from 2011 to 2016. It offered the maximum credit of $1500 per year, i.e. 15% of the entire amount. Eligible expenses included the following:
- Bathroom reinforcements
- Home modifications for wheelchairs
- Installation of safety features
However, it did not include expenses related to general home maintenance, aesthetic modifications, roof repairs, installation of water systems, HVAC, etc.
British Columbia home renovation tax credit for seniors and persons with disabilities
British Columbia’s renovation tax credit is also refundable and available since 2012. It requires you to be at least 65 years old, have a disability, or live with someone who belongs to either one of the two categories.
The maximum credit limit is 10%, and the maximum qualifying expense is $10000, making the maximum credit claim $1000.
Following expenses qualify for a tax credit under British Columbia’s renovation tax credit:
- A walk-in bathtub
- A lowering cabinet and countertop
- Door widening
- Levers, handles, etc.
The exclusions are similar to those of Ontario’s healthy homes renovation tax credit.
If you plan to renovate your home, you will probably have one question: whether or not you can claim the expenses on your taxes in Canada.
In this case, it’s best to get tax advice from an accountant regarding renovations for your situation. Experts say that if the renovation is done for resale (i.e. to sell the property as a home), you should claim deductions on Schedule 1 of your tax return, and any expenses should be claimed as “home renovation” on line 229 of Schedule 2 of your return.