How to get ready for the Home Reno Tax Credit
Canadians' love affair with the "proposed" Home Renovation Tax Credit (HRTC) continues unabated, despite the fact that legislation to make the HRTC law has not yet been drafted.
The legislation officially enacting the popular credit is expected to be introduced shortly after Parliament resumes sitting on Monday. Even if the current government is defeated under a confidence motion this fall, the HRTC is so ingrained in the Canadian taxpayer psyche that any future government will most certainly reintroduce it. That has been confirmed publicly by Liberal Leader Michael Ignatieff and Bloc Qubcois Leader Gilles Duceppe.
The HRTC is a 15% non-refundable tax credit for eligible renovation expenditures made to your home or vacation property. The credit applies to any amounts spent over $1,000, up to a maximum of $10,000, producing a maximum credit of $1,350.
The Canada Revenue Agency has indicated that a new schedule will be included in your 2009 income tax return that will allow you to list your eligible renovation expenses and calculate the amount eligible for the credit. The CRA has even introduced a nifty yellow HRTC envelope in which to save your receipts. Envelopes are available at various retail stores including Home Depot and Canadian Tire.
In the seven months or so since the credit was first introduced, the CRA has released numerous technical interpretations over exactly which types of renovation expenses qualify for the HRTC. Here's a quick summary of some of the more recent qualifying expenditures:
* Air conditioners and heat pumps that are permanently installed.
* Common areas of condos that are paid for either from the condo's reserve fund or a special fund.
* Dock: The materials and installation costs for a dock are eligible provided the dock is attached to land that forms part of the eligible dwelling.
* Sanding and refinishing of hardwood floors.
* Permanently wired or installed home security systems qualify, but ongoing alarm monitoring costs do not.
* Sauna: The costs of installing a wood-fired, 10 x 10-foot, outdoor sauna building on the land that forms part of an eligible dwelling qualifies.
* Solar panels on your home or on adjacent land qualify unless the cost is part of the purchase price of the home. You can still claim the full HRTC on the costs of the installation if you've received another government tax credit or grant for installing the solar panels.
* Tree removal if the removal relates to a renovation project that is of an "enduring nature and integral to the home."
* Wireless broadband tower: The costs of building such a tower, even if unattached to your home but anchored to the ground qualifies, provided it's installed on the adjoining one half-hectare of land that is considered an eligible dwelling