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Home Renovation Tax Credit
Only available for the 2009 tax year.
The Home Renovation Tax Credit* is a non-refundable tax credit based on eligible expenses for improvements to your house, condo or cottage. It can be claimed on your 2009 income tax return.
It applies to eligible purchases made after January 27, 2009, and before February 1, 2010. The HRTC applies to eligible expenses of more than $1,000, but not more than $10,000, resulting in a maximum non-refundable tax credit of $1,350 [($10,000 − $1,000) × 15%].
*Subject to Parliamentary approval.
Topics for Home Renovation Tax Credit
Can you claim the HRTC? - Eligibility, time limits, dwelling and eligible expenses
Who is eligible for the HRTC?
Eligibility for the HRTC is family based. A family is generally considered to include you and your spouse or common-law partner, and you or your spouse's or common-law partner's children who are under 18 years of age at the end of 2009. The claim can be split among family members but the total amount claimed cannot exceed the maximum allowable. If two or more families share the ownership of an eligible dwelling, each family can claim its own credit (i.e., each up to $1,350) that is calculated on its respective eligible expenses.
All expenses must be supported by receipts and acceptable documentation. Keep them in case we ask to see them.
Eligible dwellings
An eligible dwelling is a housing unit that is eligible to be your principal residence or that of one or more of your family members at any time between January 27, 2009, and February 1, 2010.
In general, a housing unit is considered to be your principal residence when it is owned by you and ordinarily inhabited by you, your spouse or common-law partner, and your children. This means that any dwelling that you own and use personally could qualify, including your home or your cottage.
Cottages
If you own and use your home and cottage personally, eligible expenses incurred for both properties will normally qualify for the HRTC. Note that the maximum amount of eligible expenses you can claim for the HRTC is $10,000 per family.
Rental and/or business use of an eligible dwelling.
If you earn business or rental income from part of an eligible dwelling, you can claim the HRTC only for expenses incurred for the personal use areas of the dwelling.
For expenses incurred for common areas or that benefit the housing unit as a whole (such as re-shingling a roof), you must divide the expense between personal use and income earning use. For further information, consult the Business and Professional Income Guide or the Rental Income Guide.
Condominiums and co-operative housing corporations
For condominiums and co-operative housing corporations, your share of the cost of eligible expenses for common areas qualifies.
Eligibility period
The HRTC is based on eligible expenses for work performed or goods acquired after January 27, 2009, and before February 1, 2010, under an agreement entered into after January 27, 2009, related to an eligible dwelling.
How to calculate your HRTC - Worksheet and examples of calculations
The HRTC is only available for the 2009 tax year and applies to eligible expenses of more than $1,000, but not more than $10,000, resulting in a maximum non-refundable tax credit of $1,350 ($9,000 x 15%).
The HRTC will not be reduced by other government tax credits, grants, or incentives that you may be entitled to.
A worksheet is available below to track your home renovation expenses for 2009.
Example
Doug and Viviane are married and plan to renovate the house they own this summer. They expect to have the following expenses during the months of June and July 2009:
- New windows: $3,000
- Labour - installation of windows (no invoice) : $1,500
- Carpet cleaning: $200
- Buying tools: $500
- New roof: $3,500
- Interior painting: $500
- New toilet and tub: $600
- New deck: $1,000
To save money, they will do most of the home renovations themselves. Doug's friend Bill will install the windows for them for $1,500 cash, but he will not provide an invoice.
Bill will be required to report the $1,500 on his 2009 income tax and benefit return. He may also have to pay goods and services tax/harmonized sales tax. Failure to report income or pay tax owing can result in penalties and prosecution.
The $200 expense for carpet cleaning and the $500 expense for tools are not eligible for the home renovation tax credit (HRTC). Although labour costs are generally eligible expenses, because Doug and Viviane cannot substantiate the $1,500 window installation cost, they will not be able to include this amount. Therefore, Doug and Viviane will calculate their eligible home renovation expenses as follows:
| Eligible expenses | Amount |
|---|---|
| New windows | $3,000 |
| New roof | $3,500 |
| Interior painting | $500 |
| New toilet and tub | $600 |
| New deck | $1,000 |
| Total eligible expenses(TEE) | $8,600 |
| Maximum eligible expenses (lesser of TEE or $10,000) | $8,600 |
| Base amount | - $1,000 |
| Maximum allowable home renovation expenses | $7,600 |
Result
Either Doug or Viviane can claim the total home renovation expenses of $7,600 or they can split these expenses between them as long as the total amount claimed is not greater than $7,600. As a result, their maximum HRTC is $1,140 ($7,600 x 15%).
How to claim your HRTC - Acceptable supporting documentation, medical expense tax credit and other tax credits
How to claim your HRTC
A new line and schedule will be included in your personal income tax return to allow you to calculate and claim the HRTC.
Do not include your receipts and/or documents supporting your claim. Keep them in case we ask to see them.
Acceptable supporting documentation
Documentation, such as agreements, invoices, and receipts, must clearly identify the type and quantity of goods purchased or services provided, including, but not limited to, the following information:
- - information that clearly identifies the vendor/contractor, their business address and, if applicable, the GST/HST registration number;
- - a description of the goods and the date when the goods were purchased;
- - the date when the goods were delivered (keep your delivery slip as proof) and/or when the work or services were performed;
- - a description of the work performed including the address where the work was performed;
- - the amount of the invoice; and
- - proof of payment.
Receipts or invoices must indicate paid or be accompanied by other proof of payment, such as a credit card slip or cancelled cheque.
ecoEnergy Retrofit - Homes grant
The ecoEnergy Retrofit - Homes grant is administered by Natural Resources Canada. The grant applies to a host of measures that reduce energy consumption and provide for a cleaner environment. Home and property owners could be eligible for federal grants of up to $5,000 to offset the cost of making energy efficiency improvements to their home or property. Most provinces and territories have complementary programs that offer additional financial assistance based on the results of the ecoEnergy Retrofit evaluation.
Questions and answers - Frequently asked questions and answers
What is the Home Renovation Tax Credit (HRTC)?
What is meant by eligible dwelling?
What is the eligibility period?
Who will be eligible for the credit?
How will the credit be calculated?
What are eligible expenditures?
To be eligible, expenditures incurred in relation to a renovation or alteration to an eligible dwelling (or the land that forms part of the eligible dwelling) must be of an enduring nature and integral to the dwelling, and includes the cost of labour and professional services, building materials, fixtures, rentals, and permits.
Eligible expenditures must be supported by acceptable documentation.
Some businesses or individuals may assert that certain items qualify for the HRTC. It is important to remember that the individual taxpayer making the claim on their tax return is responsible for ensuring that all eligibility requirements are met.
What does the CRA consider to be acceptable documentation?
Documentation, such as agreements, invoices, and receipts, must clearly identify the type and quantity of goods purchased or services provided, including, but not limited to, the following information:
- Information that clearly identifies the vendor/contractor, their business address and, if applicable, the GST/HST registration number;
- A description of the goods and the date when the goods were purchased;
- The date when the goods were delivered (keep your delivery slip as proof) and/or when the work or services were performed;
- A description of the work performed including the address where the work was performed;
- The amount of the invoice; and proof of payment. Receipts or invoices must indicate paid in full or be accompanied by other proof of payment, such as a credit card slip or cancelled cheque.
Please consult our Underground Economy Web page, for tips to protect yourself when hiring a contractor.
To verify whether someone is registered for GST/HST, please consult the GST/HST Registry.
If I own both a house and a cottage and incur eligible expenditures for both, are both sets of expenditures eligible for the HRTC?
I am planning to replace my windows in 2009. Can I hire my brother-in-law to help me out and still be eligible?
Will expenditures for the common areas of condominiums and co-operative housing corporations qualify for the credit?
I rent out my basement. If I renovate the basement for my tenant, will I be allowed to claim the credit?
No. Individuals who earn business or rental income from part of their principal residence will be allowed to claim the credit only for expenditures made for the personal-use areas of the residence.
For expenditures made for common areas or that benefit the housing unit as a whole (such as re-shingling a roof), you must divide the expense between personal use and income-earning use. For further information, please consult the Business and Professional Income Guide or the Rental Income Guide, as applicable.
If an eligible expenditure also qualifies for the Medical Expense Tax Credit (METC), will I be allowed to claim both the HRTC and METC?
Will the credit be reduced by other government grants or credits that I may receive for the same expenditures?
Does work performed by electricians, plumbers, carpenters, architects, etc. qualify?
What types of expenditures will not qualify?
The following expenditures will not be eligible for the HRTC:
- The cost of routine repairs and maintenance normally performed on an annual or more frequent basis;
- Expenditures that are not integral to the dwelling, and other indirect expenditures that retain a value independent of the renovation;
- Expenditures for appliances and audio-visual electronics; and
- Financing costs.
Do I have to submit any supporting documents with my income tax return?
How will I claim the HRTC?
Where can I get more information about this new tax credit?
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