In an effort to stimulate the sagging economy, the Government of Canada recently introduced a new Tax Rebate on home renovations done in 2009. Following the recent announcement of the Home Renovation Tax Credit (HRTC), tax taxpayers can claim 15% of their home improvement bills for work done between January 27, 2009 to February 1, 2010.
The tax credit, which is available for homes or cottages owners, is effective immediately. Taxpayers can claim renovations on their 2009 tax returns on costs over $1,000, but not exceeding $10,000 for a total tax break of $1,350 maximum.
Eligibility for the HRTC will be family based. 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.
If you own a home and a cottage, eligible expenditures incurred for both properties will normally qualify for the HRTC. However the maximum amount you can claim in respect of the HRTC is $10,000 per family.
The list of eligible expenses for the tax credit includes:
renovating kitchens, bathrooms or basements
new carpeting or flooring
building additions, decks, or retaining walls
installing furnaces or water heaters
interior and exterior painting
driveway resurfacing
Home furniture, appliances, tools, home cleaning and routine maintenance are excluded.
The home renovation program would appear to involve considerably less red tape than some existing initiatives that encourage investment in the home. Programs that involve rebates for investment in the energy efficiency of a house, for example, require a government auditor to approve the changes made to a home to ensure energy efficiencies have been realized.
The HRTC, however, requires homeowners to apply for the tax credit directly on their income-tax returns. The only demand is that the taxpayer save the appropriate receipts in case of a future audit by Revenue Canada.
Also on the home front, the government will put an extra $300 million over two years into energy retrofits, raise the amount first-time homebuyers can borrow from their RRSPs to $25,000, and provide up to $750 in tax relief to help with their purchases.
The federal government said the incentive will provide about $3 billion in tax relief to some 4.6 million families.
For more information about the HRTC program please visit:
http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhmrnvtn-eng.html
