Time is running out for Canadians who want to take advantage of the Home Renovation Tax Credit (HRTC). This federal incentive, aimed at getting the economy moving again, was implemented in the 2009 budget. The program allows homeowners to receive a tax credit on expenses incurred by Jan. 31, 2010.
With just a few weeks left, let’s take an in-depth look at the program and how Canadians can ensure they capitalize on this opportunity.
The HRTC is a 15 per cent credit on renovation costs over $1,000, but no more than $10,000. Of course, the renovation costs could be larger, but the program caps out at $10,000. In total, homeowners could receive as much as a $1,350 tax credit if they incur expenses adding up to $10,000. Deductions are to be filed on your 2009 personal tax returns.
Remember, not everything home-related will qualify for this tax credit. Things such as a kitchen, bathroom or basement renovation, new carpet or hardwood, decks, fencing and sod are eligible expenses, as are furnaces and water heaters.
Along with the actual cost of renovating, the government will allow associated expenses such as building permits, professional services, equipment rentals and incidental expenses to be used as a deduction as well.
The HRTC is not, however, intended for routine repairs and maintenance. As such, maintenance contracts are not eligible for things such as snow removal, furnace cleaning or carpet cleaning. Furniture, appliances or the purchasing of tools are also not eligible for this tax credit.
Additionally, this credit is only available for properties used for personal use. This could include your primary residence and any vacation or second home you might have. The credit can be spread out with expenses occurring on multiple properties; however, the maximum tax credit of $1,350 remains the same and is family-based.
With that said, the credit could be divided among family members for tax purposes. This credit is not available for expenses incurred on investment properties.
Keep in mind that, of course, the government can ask to see copies of all receipts for expenses incurred, so cash-paid side jobs, where no receipt is issued, will not be eligible for this program.
If you have been considering a renovation, big or small, now is the time to get serious. Get moving and make those last minute purchases so you can claim the tax deduction before it’s too late.
Many homeowners choose to access equity in their homes to cover the cost of renovations, either by way of a new mortgage or a line of credit. Current interest rates remain incredibly low, so this is a win-win situation for homeowners.
Contact a mortgage professional right away to discuss your options for financing a renovation. There aren’t many days left in January to make this happen!
— Sharon Essington is an Accredited Mortgage Professional with Verico Canada Mortgage Direct. Sharon specializes in providing a creative approach to mortgage financing for individuals looking to take advantage of the current opportunity market. For more information on this topic, or to discuss your individual mortgage needs, please call 403.239.8250.