Home Renovation Tax Credit (HRTC)

The Home Renovation Tax Credit (HRTC) is a proposed tax credit that will only
be available for the 2009 tax year. It was proposed as part of the 2009 Federal
Budget.

Basics of the HRTC

This is a temporary tax credit, and is a non-refundable tax credit.
The tax credit is 15% of eligible expenditures on home renovations made in
respect of eligible buildings.
The tax credit applies to expenditures over $1,000, up to $10,000.
The maximum tax credit amount is $1,350 per family ($9,000 x 15%)
Tax credit will apply for costs incurred after January 27, 2009 and before
February 1, 2010.
Costs related to an agreement entered into before January 28, 2009 are not
eligible for the credit.
Costs incurred will be claimed on the 2009 tax return

, including the January 2010 costs.

The HRTC will not be reduced by any other tax credits or grants to which a
taxpayer is entitled, for the same expenditures, under other government
programs. For example, if an eligible expenditure also qualifies for the medical
expense tax credit (METC), both the METC and the HRTC can be claimed.

Family, for purposes of sharing the HRTC:

A family consists of an individual, and where applicable, their spouse or
common-law partner, and children under 18.
Each family is subject to the maximum tax credit of $1,350, based on eligible
expenditures.
If one family member is unable to utilize the entire credit, the unused portion
may be claimed by one or more of the other family members.
If two or more families share ownership of an eligible dwelling, each of those
families will be eligible for their own credit up to $1,350, based on eligible
expenditures.

Eligible dwellings

An eligible dwelling is a dwelling which qualifies as the individual's principal

residence at any time during the period January 28, 2009 to January 31, 2010
inclusive, and includes the land that forms part of the dwelling.
A housing unit qualifies as a principal residence if it is owned by the individual
and ordinarily inhabited by the individual, the individual's spouse or common-
law partner, or their children. This could include a cottage or vacation home.
 For condos and co-op housing, costs will be eligible for the credit if they are
incurred to renovate the individual's principal residence "unit", and a share of
the cost in respect of common areas may also be claimed.
Where a portion of a principal residence is rented out, the credit can be
claimed only for expenditures made in respect of the personal-use areas of the
home.
Where costs are incurred for common-areas of a partly-rented home, such as
a roof, the credit will apply only to the portion allocated as personal use. See
our article on property rental expenses.

Eligible expenditures
Must be supported by receipts, which will not have to be submitted with the tax
return, but must be available if requested by Canada Revenue Agency (CRA).
Expenditures will qualify if the renovation or alteration of the eligible dwelling is
of an enduring nature, and is integral to, or built into, the dwelling.
Examples of eligible expenditures would be

re-shingling a roof
interior or exterior painting
kitchen, bathroom, or basement renovations
replacing windows or doors
new furnace or water heater
resurfacing a driveway
laying new sod
upgrading wiring
upgrading insulation
Expenditures are not eligible if the goods or services are provided by a person
with whom the taxpayer is not dealing at arm's length (e.g. close relative),
unless that person is registered to collect GST/HST.
Expenditures are not eligible if they are for repairs and maintenance which are
usually performed on an annual or more frequent basis.
Expenditures for appliances (e.g. fridge, stove) and audio-visual electronics
are not eligible.
Financing costs are not eligible.
Other examples of non-eligible expenditures:

furniture and draperies

purchase of tools or other construction equipment
carpet cleaning
house cleaning
maintenance contracts for furnace cleaning, snow removal, lawn care, etc.
an air conditioner which is a portable plug-in type (an air conditioning unit
which is built in to the home heating or ventilation system would be eligible).

Other HRTC resources

Home Renovation Tax Credit on Department of Finance website
 Home Renovation Tax Credit, again on the Department of Finance website
Home Renovation Tax Credit on the Canada Revenue Agency (CRA) website
http://www.taxtips.ca/filing/hrtc.htm

Eligible and ineligible expenses

The expenses are eligible when they are incurred in relation to renovations or alterations
to an eligible dwelling (or the land that forms part of the eligible dwelling) and are
permanent in nature. As a general rule, if the item you purchase will not become a
permanent part of your home or property, it is not eligible. There are items, however,
that have been explicitly excluded (see below).

Due to the large number of expenses that can qualify, it is not possible to
provide a complete list.

Note
Some businesses or individuals may assert that certain items qualify for the HRTC. It is
important to remember that you are responsible for ensuring that all eligibility
requirements are met when you claim this credit on your tax return.

Examples of eligible expenses

• Renovating a kitchen, bathroom, or basement
• Windows and doors
• New carpet or hardwood floors
• New furnace, boiler, woodstove, 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, permits, professional services, equipment
rentals, and incidental expenses
• Fixtures - blinds, shades, shutters, lights, ceiling fans, etc.
 Note
Window coverings, such as blinds, shutters and shades, that are directly
attached to the window frame and whose removal would alter the nature of
the dwelling are generally considered to be fixtures (i.e., has become part of
the home) and therefore would qualify for the HRTC. In some circumstances,
draperies and curtains may qualify for the HRTC, if they would not keep their
value or usefulness if installed in another dwelling. If these qualifying criteria
are not met, it is likely that draperies and curtains would not qualify for the
HRTC.

Examples of ineligible expenses

• Furniture, appliances, and audio and visual electronics
• Purchasing of tools
• Carpet cleaning
• House cleaning
• Maintenance contracts (e.g., furnace cleaning, snow removal, lawn care, and pool
cleaning)
• Financing costs

Work performed by electricians, plumbers,

carpenters, architects
Generally, work performed by electricians, plumbers, carpenters, architects, etc. in
respect of an eligible expense qualifies. If you're planning on hiring a contractor to do
construction, renovation, or repair work on your home, the Get it in Writing! Web site has
information that will help you.

Family member hired for renovations

Expenses are not eligible if the goods or services are provided by a person related to you,
unless that person is registered for the Goods and Services Tax/Harmonized Sales Tax
under the Excise Tax Act. If your family member is registered for GST/HST and if all
other conditions are met, the expenses are eligible for the HRTC.

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. For more information,
see The underground economy and Will you do it for cash?.

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%).

More examples of calculations

Home renovation expenses

Eligible expenses are those incurred after January 27, 2009 and before February 1, 2010,
under an agreement entered into after January 27, 2009, for work performed or goods
acquired for an eligible dwelling.

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Worksheet
Use this worksheet (PDF 21 KB) to track your home renovation expenses for 2009.

All expenses must be supported by receipts. Keep them in case we ask to see
them later.
Acceptable Supporting Documentation

Supplier or Contractor Amount paid

Description
Date on sales (including
(indicate if labour
slip or contract GST/HST No. all applicable
Name is included)
(if applicable) taxes)

Total eligible expenses = 1

Reimbursement of expenses, if any 2

Portion of expenses incurred and related to rental and/or

+ 3
business use, if any

Add lines 2 and 3 = - 4

Line 1 minus line 4 (maximum $10,000) = 5

-
Base amount 6
1,000.00

Line 5 minus line 6 (if negative, enter "0") = 7

Amount claimed by your spouse or common-law partner - 8

Line 7 minus line 8 (if negative, enter "0")
= 9
Maximum allowable home renovation expenses
Date Modified: 2009-07-08

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Important Notices
http://www.cra-arc.gc.ca/tx/ndvdls/sgmnts/hmwnr/hrtc/menu-eng.html