Vancouver Ethiopian Blog

Ethiopian life in Vancouver, BC, Canada

The Canadian Home Renovation Tax Credit Explained

The Home Renovation Tax Credit (HRTC) has left many homeowners wondering how this new credit available for tax year 2009 will impact their tax returns.

Here are some quick facts that can help you know what to expect if you have made eligible renovations to your homes and cottages.

The deadline for HRTC has now passed; but it is tax time and you will need to know what to claim. Please keep in mind that your renovations must have been done before February 1, 2010.

Important Quick Facts:

  • The tax credit is only for 2009 but can be claimed for work performed or goods purchased for the purpose of renovating an eligible dwelling until February 1st, 2010.
  • You must have a minimum of  $1,000 dollars in home renovation expenses to claim the credit.
  • The maximum amount of expenses that may be applied to obtain the credit is $10,000.
  • The maximum amount of credit that can be claimed is $1,350. Here is how it is calculated:  ($10,000 – $1,000) x 15%
  • The credit may be split amongst (to a maximum of $10,000) two or more family members. The homeowner, his/her spouse, and the homeowner’s child that is under 18 years of age can claim the credit even if the other family members are not part owners of the property.
  • Only expenses incurred between January 27th, 2009 and February 1st, 2010 are eligible.
  • An eligible dwelling must be owned by the taxpayer and ordinarily inhabited by either the taxpayer, their spouse, or their children. This includes a family cottage or secondary residence as well as homes purchased and sold during the year.
  • If the work is done by the homeowner, the eligible expenses include expenses for building materials, fixtures, equipment rentals, building plans and permits but not the value of labour or tools.

Here are some examples of expenses eligible for the HRTC:

  • Renovating a kitchen, bathroom, or basement
  • Windows and doors
  • New flooring – carpet, linoleum, hardwood, floating laminate, etc.
  • New furnace, wood stove, boiler, fireplace, water softener, water heater, or oil tank
  • Permanent home ventilation systems
  • Central air conditioner
  • Permanent reverse osmosis systems
  • Septic systems
  • Wells
  • Electrical wiring in the home (e.g., changing from 100 amp to 200 amp service)
  • Home security system (monthly fees do not qualify)
  • Solar panels and solar panel trackers
  • Painting the interior or exterior of a house
  • Building an addition, garage, deck, garden/storage shed, or fence
  • Re-shingling a roof
  • A new driveway or resurfacing a driveway
  • Exterior shutters and awnings
  • Permanent swimming pools (in ground and above ground)
  • Permanent hot tub and installation costs
  • Pool liners Solar heaters and heat pumps for pools (does not include solar blankets)
  • Landscaping: new sod, perennial shrubs and flowers, trees, large rocks, permanent garden lighting, permanent water fountain, permanent ponds, large permanent garden ornaments
  • Retaining wall
  • Associated costs such as installation, building plans, permits, professional services, equipment rentals, and incidental expenses
  • Fixtures – blinds, shades, shutters, lights, ceiling fans, etc.

Here are Examples of Expenses that are not be eligible for the HRTC:

  • Furniture, household appliances, and electronic home-entertainment devices
  • Purchasing of tools
  • Carpet cleaning
  • House cleaning
  • Maintenance contracts (e.g., furnace cleaning, snow removal, lawn care, and pool cleaning)
  • Financing costs
  • Amounts paid as part of the purchase of your new house, including “upgrades”
  • Expenses to acquire goods that have been previously used or leased by the taxpayer or an eligible family member (e.g., hot water tank)
  • Expenses incurred with respect to the parts of an eligible dwelling used for income generating purposes

Proof of Expenses:
Expenses have to be supported by invoices, receipts, and agreements that include 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;
  • proof of payment (receipts and invoices) – invoices must indicate “paid” or be accompanied by other proof of payment, such as a credit card slip or cancelled cheques.

Important Tips:

  • Taxpayers receiving the ecoEnergy Retrofit – Homes grant may use the full amount of their expenses. The HRTC will not be reduced by the amount of the grant.
  • Save all of your invoices for home renovations, upgrades and materials and review them at tax time to determine their eligibility.
  • Be sure your tax software is taking advantage of the claiming the credit by claiming it on the right tax payer’s return.

Example of Family’s Claim the HRTC:

Logaw and Qonjeet are a married couple that have decided to replace their windows with thermal windows and replace the insulation in their home. The total cost of these renovations is $5,000 dollars, indicated on a receipt given by the contractor.

The calculation of the credit is as follows:

Amount paid for eligible  renovations expenses $5,000.00
Minus: Base amount $1,000.00
Allowable Home Renovations Expenses (entered on Schedule 1 of the Federal return) $4,000.00
Multiplied: Tax Credit Rate 15.00%
Home renovation tax credit $600.00

Note: The allowable home renovation expenses may be split between Logaw and Qonjeet on their respective tax returns, or the full amount may appear on only one return, which ever provides the best result for this family.

So, it is tax filing time – now you know what to claim and get back the credit you deserve for contributing to Canada’s economy.

There are a number of softwares for tax returns. I have used many of them. The one I recommend is UFile.


My next blog entry will be on Thursday February 25, 2010

Mullkam Samint!


February 18, 2010 - Posted by | Ethiopian Adoptions, Ethiopian Alphabet, Ethiopian Businesses, Ethiopian Calendar, Ethiopian Careers, Ethiopian Citizenship, Ethiopian Culture, Ethiopian Dating, Ethiopian Education, Ethiopian Food, Ethiopian History, Ethiopian Holidays, Ethiopian Investments, Ethiopian Languages, Ethiopian Media, Ethiopian Music, Ethiopian Parenting, Ethiopian Politics, Ethiopian Professors, Ethiopian Proverbs, Ethiopian Relationships, Ethiopian Religions, Ethiopian Restaurants, Ethiopian Socials, Ethiopian Sports, Ethiopians & Technology, Ethiopians and Drugs, Ethiopians Back Home, Ethiopians in Vancouver | , , , , , , , , , , , ,

1 Comment »

  1. I have read a lot about this on other articles written by other people, but I must admit that you is the best.

    vancouver carpet cleaning

    Comment by rosariodawson | April 16, 2010 | Reply

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