Home Renovation Tax Credit Deadline January 31
David Christianson, CFP, R.F.P., TEP
You can save up to $1,350 in taxes this year, by spending $10,000 on qualifying home (including condo common area and cottage) renovations. However, you must complete any purchase and have the materials “available to you” for use before midnight on January 31.
This means you do not have to have the work completed, but you must take delivery of materials. Labour is only claimable on work completed. As I understand it, you cannot contract for work and pre-pay, and expect to claim it.
Our good friends at CRA have created a brand new Schedule – Schedule 12 – to make it easy to claim renovation expenses.
The temporary 15% Home Renovation Tax Credit applies on renovation expenditures over $1,000 and up to $10,000. This non-refundable credit can reduce your taxes by up to $1,350 for 2009 ($9,000 x 15%), though you must spend $10,000 on qualifying expenses to maximize the credit. The qualifying period was from January 28, 2009 to January 31, 2010.
Naturally, you want to save your receipts in case you are audited, which is the purpose of this reminder. However, you do not submit them when you apply for the credit.
The expenses can include work performed or goods acquired. There is only one credit per family, though some expenses could be for one property and some expenses for another, as long as both are qualifying dwellings. A qualifying dwelling is owned by you and used personally by you or your family.
Note that if two or more families share the ownership of an eligible dwelling, they are each entitled to their own separate credit, up to the maximum.
What qualifies?
Almost all improvements or alterations to a house, cottage or condominium, including landscaping, qualify. Examples provided by CRA include renovating a kitchen, bathroom or basement, new carpet or hardwood floors, fixtures, adding an addition, deck, swimming pool, fence or retaining wall, a new furnace or water heater, painting the interior or exterior of the house, resurfacing a driveway and laying new sod. Equipment rentals and permits are also eligible. In the fine print, window coverings that are permanently affixed to the house will also qualify.
Condo owners may also be able to claim their share of eligible expenditures for common areas. Make sure you get a separate receipt for your assessment and the work performed, to keep with your records.
What does NOT qualify?
Not allowed are items like maintenance contracts, carpet cleaning, and purchase of tools, electronics, furniture, draperies or appliances.
CRA has provided a very useful chart to track and calculate your qualifying expenses, though you do not file this chart with your return.
The chart has columns showing date of sales slip or contract, name of supplier or contractor, GST number, description of work or supply and amount paid. Add up all of the amounts to a maximum of $10,000, then subtract $1,000 (sort of the “deductible”) and the balance is your maximum allowable home renovations expense to claim on your 2009 tax return.
More detail and a printable version of the chart is available from the CRA website, at http://www.cra-arc.gc.ca/tx/ndvdls/sgmnts/hmwnr/hrtc/menu-eng.html
Post questions and comments.
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David Christianson is a fee-only financial planner and investment counsel with Wellington West Total Wealth Management Inc. Visit www.davidchristianson.com for up-to-date financial news, commentary, and interactive community.