Thinking of renovating your home? When planning your renovation budget, look for the various benefits you may be eligible for, such as certain tax credits. Below is an overview of the federal and provincial programs available across Canada.
The Government of Canada has implemented certain tax measures to help Canadian families when they renovate.
For instance, you could take advantage of a portion of the GST/HST new housing rebate program if your renovations meet certain conditions. The federal government can give you a rebate on part of your tax if you buy a new home, if you build a new home, or—and this is what we’re interested in—if you do “substantial renovations”.
To qualify as “substantial”, these renovations must transform a substantial portion of your home (90% or more). The calculation of this percentage is subject to numerous conditions. For example, only living spaces may be considered; garages and crawl spaces are excluded. Renovating the basement alone would not be considered a substantial renovation.
Note that the work must be performed on a property that is your usual place of residence or that of a relative.
People with disabilities and those over the age of 65 can claim a deduction on their annual income tax return for certain renovations.
These must be done in their primary residence to improve accessibility and safety, for example to get around better or to perform everyday tasks more easily.
Materials, fixtures, plans and permits, and professional labour are eligible expenses, up to a maximum of $10,000. Keep your receipts and talk to your accountant.
There are also deductions specific to each province. When preparing your renovation budget, get advice from an expert. Each program has many details, such as eligibility requirements and, sometimes, time limits. Here is a snapshot by province.
Persons with disabilities or those over the age of 65 can get a tax credit from the province for home accessibility or safety work.
Keep your receipts if you are installing grab bars in the bathroom, handrails in hallways or elevators, for example. Any other work that allows you to remain active and independent in your home is also deductible. This includes widening entrance doors or installing adjustable countertops.
You could claim up to $10,000. If you received any other government assistance, do your calculations carefully. You cannot exceed this amount.
Manitoba residents who install a new geothermal or solar heating system can receive a Green Energy Equipment Tax Credit.
New Brunswickers over the age of 65 can claim deductions on their tax return if they make improvements to their home to make it more accessible.
For example, a person who wishes to modify their bathroom to include a wheelchair shower or a walk-in bathtub may be able to deduct these amounts from their taxable income.
You can claim up to $10,000 in credits. This limit includes all government assistance received.
In Ontario, seniors age 65 and over or those living with family members over the age of 65 can claim a tax credit for some types of work on their homes.
The work must help a person to live in their home safely and offer greater autonomy. For example, installing a ramp or stair lift could be considered an eligible expense.
This tax credit is worth 25% of up to $10,000 in eligible expenses. In other words, the maximum credit is $2,500.
Homeowners who build or renovate residential wastewater treatment systems (septic tanks) may be eligible for a tax credit. The work must be carried out at the primary residence or cottage and is subject to certain conditions.
The tax credit is worth 20% of the amount paid over $2,500, up to a maximum of $5,500 per home.
Keep in mind that this tax credit applies to 2017 through 2022 only.
Saskatchewan residents undertaking home repairs can benefit from a tax credit that provides financial support for a wide range of work.
Eligible expenses include painting, renovating rooms, replacing doors, windows, air conditioning electrical systems, and ventilation, as well as paving the yard and even landscaping, to name a few.
This tax credit is worth 10.5% of eligible expenses, up to $2,100. The measure will end on December 31, 2022.
If you live in the following provinces or territories, tax programs may be created in the future for home renovations. Speak to an expert before undertaking any work.
If you want to live in a home that best suits your needs and expectations, renovations can be a good idea. Before you get started, do some research on what you can do to save money, including talking to experts and your accountant. Did you know that in addition to tax credits, you may also be eligible for grants from the federal and provincial governments? We’re here to answer your questions.
The information in this article is provided for illustration purposes only and is not exhaustive. For advice on your finances and to determine whether the features described in this article are right for you, please speak with your National Bank advisor or, if applicable, a professional (accountant, tax expert, lawyer, notary, real-estate broker, etc.).
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