Principal Issues: Can a condominium unit owner claim the HRTC on his or her portion of the expenditures incurred to renovate a condominium elevator?
Position: Yes, if renovations are made in the common area of a condominium and the condominium unit is an eligible dwelling, the individual owner can claim the HRTC on his or her share of the total cost of renovating common areas.
Reasons: 2009 Federal budget statements.
XXXXXXXXXX 2009-033782 A. Mahendran
January 11, 2010
Dear XXXXXXXXXX :
We are responding to your correspondence, which we received on August 13, 2009, regarding the new home renovation tax credit (HRTC). In particular, you would like to know whether you can claim the HRTC on your portion of the expenditures incurred to renovate a condominium elevator. We apologize for this delayed reply.
The legislation regarding the new HRTC has been enacted and is contained in section 118.04 of the Income Tax Act. The HRTC provides individuals with a temporary 15% non-refundable income tax credit on eligible home renovation expenditures for services received or goods acquired, after January 27, 2009, and before February 1, 2010. However, expenditures for services received or goods acquired under agreements entered into before January 28, 2009, do not qualify for the HRTC. 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.
Under section 118.04, expenditures qualify for the HRTC if they are directly attributable 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 include the cost of labour and professional services, building materials, fixtures, equipment rentals, and permits.
An eligible dwelling is a housing unit located in Canada that is owned by the individual, at the time of the renovation, and ordinarily inhabited by the individual, his or her current or former spouse or current or former common-law partner, or his or her children at any time after January 27, 2009, and before February 1, 2010. 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 can be claimed for eligible expenditures incurred to renovate the condominium unit that is an eligible dwelling, and it can be claimed as well for the individual owner's share of eligible expenditures incurred for common areas. Generally, the expenses incurred for common areas are allocated to unit owners based on the condominium corporation's governing documents.
Providing all of the above conditions are met, renovations to existing elevators will qualify for the HRTC. Therefore, you can claim the HRTC on your portion of the expenditures incurred to renovate the condominium elevator. However, we would like to emphasize that routine maintenance and repairs, normally performed on an annual or more frequent basis, do not qualify for the HRTC.
To support a claim for renovations to common areas of the condominium made by the condominium corporation on behalf of the individual owners, owners will need documentation from the corporation or the board of directors that identifies the amounts incurred for the renovation work. The documentation should clearly identify the individual condominium owner's portion of these expenses, as well as the name of the contractor and, if applicable, the goods and services tax/harmonized sales tax registration number, a description of the work performed, and the dates when the work or services were performed. Generally, documentation may be in the form of a letter from the corporation signed by an authorized individual and can include copies of agreements, invoices, or receipts.
You can find more information on the HRTC on the Canada Revenue Agency Web site at www.cra.gc.ca/hrtc.
We trust that the information provided is helpful.
Yours truly,
Nerill Thomas-Wilkinson
Acting Manager
for Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch