Q. Last year, I spent more than $8,000 to partially finish my basement. If I redid my kitchen, can I claim the new renovation tax credit?
A. The new Home Renovation Tax Credit (HRTC) was introduced this year, as part of Canada’s Economic Action Plan.
With world economies falling into a recession, including Canada, the HRTC is part of a stimulus package to help the ailing real estate industry. Will this revive our real estate market? The verdict has yet to be decided but none of my renovation clients are complaining.
Eligible home expenditures spent between Jan. 27, 2009 and Feb. 1, 2010 will qualify for the HRTC. The HRTC is a non-refundable tax credit and can be claimed when filing your 2009 tax return. Eligible expenditures for renovations or alterations must be of an enduring nature and integral to the home. Therefore, routine expenditures such as house cleaning, snow removal, furniture and appliances will not qualify for the credit.
The following will give you some insight:
• Expenditure claim is minimum $1,000 to $10,000 maximum. Maximum claim results in $1,350 tax saving.
• Home refers to place that you and family own and inhabit for personal use. This includes principal residence and cottage. Investors need not apply.
• Eligible expenditures include but are not limited to: Re-shingling the roof, new flooring, renovating the kitchen, new furnace, additions and a host of other costs.
• Keep receipts as proof, including cost materials, invoices, etc.
If you are planning to have some work done on your home and want to maximize the credit, talk to your financial adviser or visit Canada Revenue Agency’s website, cra-arc.gc.ca
– Henry Choo Chong, CGA, can be reached at email@example.com and
416-489-7800, ext. 227.