Principal Issues: Whether the cost of sanding and refinishing hardwood floors is a qualifying expenditure for the purposes of the Home Renovation Tax Credit.
Position: Yes if all other conditions are met.
Reasons: Renovation is of an enduring nature and is integral to the dwelling.
XXXXXXXXXX 2009-033183 Andrea Boyle August 19, 2009
Dear XXXXXXXXXX :
Re: Home Renovation Tax Credit
This is in response to your letter of July 7, 2009 regarding the eligibility of sanding and refinishing the hardwood floors in your kitchen, dining room, and living room for the new home renovation tax credit (HRTC).
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, but not more than $10,000, which will result in a non-refundable tax credit of up to $1,350.
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 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.
We consider that the sanding and refinishing of hardwood floors is a renovation that is enduring in nature and integral to an eligible dwelling. Providing the other above conditions are met, expenses such as labour, materials, and equipment rentals will qualify for the HRTC. The cost of purchasing any tools would not, however, qualify for the HRTC.
You can find more information on the HRTC on the Canada Revenue Agency Web site at www.cra.gc.ca/hrtc and on the Government of Canada Web page at www.actionplan.gc.ca/grfx/docs/HRTC_eng.pdf.
I trust that the information provided will be helpful.
Yours truly,
Louise J. Roy, CGA
Manager
For Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch