Principal Issues: Who would qualify for the home renovation tax credit (HRTC) if expenditures are incurred in relation to window replacements of a condominium?
Position: If windows are part of the common area of the condominium and the condominium unit is eligible to be an individual's principal residence, the individual would be able to claim the HRTC on his or her share of the cost of replacing the windows.
Reasons: In the case of condominiums, the HRTC will be available for eligible expenditures incurred to renovate the unit that is eligible to be an individual's principal residence as well as the individual's share of the cost of eligible expenditures incurred for common areas.
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Dear XXXXXXXXXX :
The office of the Honourable James M. Flaherty, Minister of Finance, forwarded to me a copy of your correspondence concerning the new home renovation tax credit (HRTC). Please accept my apology for this delayed response.
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, Mr. Flaherty 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.
In the case of condominiums, the HRTC will be available for eligible expenditures incurred to renovate the unit that is eligible to be an individual's principal residence as well as the individual's share of the cost of eligible expenditures incurred for common areas. Accordingly, if windows are part of the common area of the condominium and the unit is eligible to be the individual's principal residence, the individual would be able to claim the HRTC on his or her share of the cost of replacing the windows. However, the credit will not be available for expenditures incurred for work performed or goods acquired under an agreement entered into before January 28, 2009.
More information on the HRTC is available 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 provided will be helpful.
Sincerely,
Jean-Pierre Blackburn, P.C., M.P.
Minister of National Revenue
Ananthy Mahendran
(905) 721-5204
2009-032291