Home Renovation Tax Credit

New in Canada's Economic Action Plan

Through Canada's Economic Action Plan, the federal government introduced a temporary Home Renovation Tax Credit (HRTC) to encourage Canadians to undertake new renovation projects or accelerate planned future projects. This supported jobs in the construction industry – providing needed stimulus when the Canadian economy was weakest. This initiative is estimated to cost $3 billion over 2009-10 and 2010-11.

About the Initiative

The HRTC is a 15 per cent non-refundable tax credit that applies to eligible home renovation expenditures for work performed or goods acquired after January 27, 2009, and before February 1, 2010, pursuant to contracts entered into after January 27, 2009. The credit may be claimed on the portion of eligible expenditures exceeding $1,000, but not more than $10,000. This represents up to $1,350 in tax relief for each claimant.

Renovation expenditures on an eligible dwelling or the land on which it sits qualify for the HRTC if the renovation is of an enduring nature and integral to the dwelling. For example, homeowners are able to claim expenditures for major renovation projects, such as finishing a basement, renovating a kitchen or building an addition. Costs associated with such projects are eligible, including costs for permits, professional services, equipment rentals and incidental expenses. The costs of routine repairs and maintenance, appliances, audio-visual electronics and financing are not eligible. A dwelling in Canada is generally considered eligible if it is owned and used for personal purposes. Examples of eligible dwellings include a house, a cottage or a condominium unit.

The HRTC complements support provided by the federal government for Canadians to undertake energy-saving home improvements. Federal grants paid through the ecoENERGY Retrofit program do not reduce the value of claims made for expenditures under the HRTC. Eligible renovation expenses claimed under the Medical Expense Tax Credit may also be claimed under the HRTC.

How It Works

Individuals may claim the HRTC when filing their income tax returns for 2009. They must keep receipts for expenditures.

Who Is Eligible

An estimated 4.6 million Canadian families are expected to benefit from the HRTC.

How to Find Out More

For more information, please visit the Department of Finance Canada website or the Canada Revenue Agency website.

Initiative Update

Legislation to implement the HRTC received Royal Assent on December 15, 2009.

Homeowners who incurred eligible home renovation expenditures before February 2010 can claim these expenses on their 2009 income tax returns.

More Info:
http://www.plandaction.gc.ca/initiatives/eng/
index.asp?mode=5&initiativeID=42&clientid=4

For more information on the Economic Action Plan initiatives, follow the links below:

•  Alphabetically
•  By Theme

•  By Department or Agency