Understanding Ineligible HRTC Home Renovations
Know Which Home Reno Projects Do Not Qualify for the Tax Credit
Sep 25, 2009
In an attempt to stimulate the economy, Canada's Budget 2009 contains an interesting proposal for homeowners. The Home Renovation Tax Credit, or HRTC, offers incentives to Canadians to improve their homes.
Of course there are stipulations to the new act. Qualified dwellings include houses, cottages and condos. To qualify, the person making the tax credit claim must own and "personally use" the dwelling.
Furthermore, the Home Renovation Tax Credit guidelines state that the credit is family based. For purposes of the tax credit, Budget 2009 defines a family as consisting of "an individual, and where applicable, the individual’s spouse or common-law partner, and their children who were, throughout 2009, under the age of 18 years."
How Much Can I Claim On My Tax Return?
The limits of the Home Renovation Tax Credit are from $1,000 to $10,000. The first $1,000 is paid by the home owner. 15 percent of the total of additional expenses, up to $10,000, will be your tax credit. Full details are available here
What Kinds of Renovations or Purchases Are Considered Ineligible Expenses?
The easy way to think about which renovations qualify for the tax credit is to imagine performing the renovation project and then removing it. If the renovation can be undone, or removed, without significantly changing the nature of the dwelling or the surrounding land, then the item in question is ineligible.
Examples of Projects or Purchases That Are Ineligible For the Home Renovation Tax Credit
- New appliances do not qualify for the tax credit. This includes washers, dryers, ranges and refrigerators.
- The cost of hiring a neighbor to build the new deck, unless he or she is registered for the Goods and Services Tax/Harmonized Sales Tax.
- Renovations to a part of the dwelling used for income-related purposes. An example of this would be a project to improve the basement for a tenant.
- Furniture, audio-visual components and yard decor are not eligible for the Home Renovation Tax Credit.
- Maintenance items such as routine pool service, backyard furniture, lawn care, chimney cleaning, snow removal and the like are not eligible.
- Although window coverings that are attached to the window frame are considered eligible renovations, draperies or any other type of window coverings that can be removed without altering the nature of the dwelling will not qualify for the tax credit.
- Mortgage or other financing costs associated with the renovation are disqualified.
The most important aspect of the Home Renovation Tax Credit (HRTC) is that it won't last forever. All renovations must be performed before February 1, 2010.
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