Principal Issues: Does the purchase and installation of a Murphy bed qualify for the HRTC?
Position: The purchase and installation of a Murphy bed in an eligible dwelling will qualify for the HRTC.
Reasons: The design of a Murphy bed generally requires that it be attached to the wall, thereby becoming integral to the dwelling.
XXXXXXXXXX
Dear XXXXXXXXXX :
XXXXXXXXXX , forwarded to me a copy of your correspondence, which I received on July 9, 2009, asking whether the purchase and installation of a Murphy bed qualifies 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 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 cottage, qualifies for the HRTC.
Mr. Flaherty stated in the budget that alterations or other items, such as furniture or draperies, whose value depends on the renovation will be considered integral to the dwelling and will qualify for the HRTC. As a Murphy bed will not likely retain its value if installed in another dwelling and its design generally requires it to be attached directly to a wall, the purchase and installation of a Murphy bed in an eligible dwelling will qualify for the HRTC if all the other above conditions are met.
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 provided is helpful.
Sincerely,
Jean-Pierre Blackburn, P.C., M.P.
Robert Dubis
(905) 721-5191
2009-033202