What Home Renovation Programs Are Tax Deductible in Canada?
In Canada, there are several tax deductions and credits available for homeowners looking to renovate their homes. These programs are aimed at encouraging energy efficiency, accessibility, and home improvements that meet specific government criteria. Here’s a breakdown of some key tax-deductible programs:
1. Home Accessibility Tax Credit (HATC)
This program allows you to claim eligible home renovation expenses if they improve the accessibility or safety of your home. You can claim up to $10,000 in eligible expenses per year for renovations that allow seniors or individuals with disabilities to live safely in their home. Examples include installing ramps, walk-in bathtubs, or grab bars.
Maximum credit: 15% of the first $10,000 in eligible expenses, giving you a maximum benefit of $1,500.
2. GST/HST New Housing Rebate
If you’re renovating a home significantly, like rebuilding or making major improvements that affect more than 90% of the building, you might be eligible for a rebate on the federal portion of the GST or HST you paid on your renovation costs.
This rebate is available for substantial renovations of homes used as a primary place of residence.
3. Medical Expense Tax Credit (for Renovations)
Home renovations that are necessary due to a medical condition may qualify for the Medical Expense Tax Credit (METC). This is often applicable if you’re making changes like adding ramps, widening doorways, or adjusting bathrooms for individuals with mobility issues.
You can claim the expenses if the renovations are prescribed by a doctor and made for the purpose of assisting the individual to function within their home.
4. Home Energy Renovation Programs
Although not directly tax-deductible, many provinces and the federal government offer energy-efficiency grants or rebates that can offset the cost of green home renovations:
Canada Greener Homes Grant: Provides up to $5,000 for homeowners to make energy-efficient retrofits to their homes. An additional $600 is available for the cost of an energy audit.
Provincial Energy Efficiency Programs: Several provinces have their own programs like Ontario’s “GreenON” rebates or Quebec’s “Rénoclimat.” These help with costs for installing energy-efficient windows, doors, and HVAC systems.
5. Rental Income Renovation Deduction
If you’re renovating a rental property, you may be able to deduct certain expenses incurred for maintenance and repairs. These deductions help reduce taxable rental income and include repairs to roofs, walls, and plumbing. However, large improvements, like adding a new room, are typically classified as capital expenses and must be depreciated over time.
Conclusion
While not all home renovations are tax-deductible, certain programs in Canada provide significant financial relief for homeowners who are improving accessibility, energy efficiency, or medical accommodation in their homes. Always ensure that you check the latest criteria and eligibility details on the Canada Revenue Agency (CRA) website or consult with a tax professional for advice tailored to your situation.