Principal Issues: Are air conditioners and heat pumps eligible for the HRTC?
Position: A fixed air conditioning unit or heat pump that is permanently installed and whose removal alters the nature of the dwelling would be eligible. A portable or window air conditioning unit would not be eligible.
Reasons: Integral to the eligible dwelling.
XXXXXXXXXX
August 25, 2009
Dear Colleague:
I am responding to correspondence from your office concerning a request from your constituent, XXXXXXXXXX , for information on the eligibility of air conditioners and heat pumps for the new home renovation tax credit (HRTC). Please accept my apology for this delayed reply.
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 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.
As a general rule, items considered as a component part of a building are eligible for the HRTC. Under this approach, a fixed air conditioning unit or heat pump that is permanently installed and whose removal alters the nature of the dwelling would be eligible for the HRTC. However, if an air conditioning unit is a portable or a window unit, it will not be considered integral to the dwelling and will not be eligible 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 in the Government of Canada brochure available at www.actionplan.gc.ca/grfx/docs/HRTC_eng.pdf.
I trust that the information I have provided is of assistance.
Sincerely,
Jean-Pierre Blackburn, P.C., M.P.
Minister of National Revenue
Andrea Boyle
(613) 946-3252
2009-031892