Principal Issues: Would a homeowner be eligible to claim the home renovation tax credit (HRTC), if he/she decides to perform the work himself/herself. Would individual items costing less than $1,000, but totalling not more than $10,000, qualify for the HRTC.
Position: Yes.
Reasons: To be eligible for the HRTC, expenditures incurred in relation to a renovation or alteration to an eligible dwelling (or the land that forms part of the eligible dwelling) must be of an enduring nature and integral to the dwelling. Homeowners may choose to perform the work themselves; however, the value of their labour cannot be included. The HRTC is based on an individual's total eligible expenditures incurred after January 27, 2009 and before February 1, 2010.
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Dear XXXXXXXXXX :
Thank you for your correspondence received on June 9, 2009, asking whether several renovation projects would qualify for the home renovation tax credit (HRTC) if you were to perform the work yourself.
The proposed HRTC will provide individuals with a temporary 15% non-refundable income tax credit on eligible home renovation expenditures for work performed, or goods acquired, after January 27, 2009, and before February 1, 2010, for agreements entered into after January 27, 2009. Taxpayers can claim this credit for the 2009 tax year on eligible expenditures exceeding $1,000.00, but not more than $10,000.00, which will result in a non-refundable tax credit of up to $1,350.00.
The legislation regarding the new HRTC, which was introduced in the federal budget tabled on January 27, 2009, has not yet been made public. However, the Honourable James M. Flaherty, Minister of Finance, has publicly announced that expenditures will qualify if they relate to a renovation or an alteration of an eligible dwelling, including land that forms part of the eligible dwelling, and if the renovation or alteration is of an enduring nature and is integral to the eligible dwelling. Such expenditures will include the cost of labour and professional services, building materials, fixtures, equipment rentals, and permits.
An eligible dwelling is a housing unit that is eligible at any time after January 27, 2009, and before February 1, 2010, to be an individual's principal residence. In general, a housing unit is considered to be eligible to be an individual's principal residence if it is owned by the individual and ordinarily inhabited by the individual, his or her spouse or common-law partner, or his or her children. Therefore, any housing unit that an individual owns and uses personally, including a home and a cottage, qualifies for the HRTC.
The expenditures pertaining to the various projects listed within your letter, all of which you indicate will be completed before February 1, 2010, will qualify for the HRTC provided they are supported by acceptable documentation. You can perform the work yourself; however, you cannot include the value of your labour. The HRTC is based on your total expenditures, not on individual projects. If you complete all the projects on your list, you will be entitled to receive a $1,207.50 [15% x ($9,050.00 - $1,000.00)] non-refundable tax credit.
You can find more information on the HRTC on the Canada Revenue Agency Web site at www.cra.gc.ca/hrtc and in the Government of Canada brochure available at www.actionplan.gc.ca/grfx/docs/HRTC_eng.pdf. I am enclosing a copy of the brochure, for your convenience.
I trust that the information provided will be helpful.
Sincerely,
Jean-Pierre Blackburn, P.C., M.P.
Enclosure
William King
(905) 721-5205
2009-032713