Tax Relief for Home Renovations

By: André Morin

‘Tis the season for home renovations – and this year, we have some significant financial incentives to get those projects off the ground.

In January, both the Federal and Quebec Governments announced a refundable tax credit for renovation and home improvement. While both credits are designed to stimulate the economy by encouraging renovation projects, there are some differences in implementation you should be aware of.

TCHRI – Quebec Provincial Government

This tax credit is available to Quebec residents for the cost of renovations and home improvements on eligible dwellings located in Quebec. The credit is equal to 20% of eligible expenditures between $7,500 and $20,000, and is capped at $2,500 (($20,000 - $7,500) x 20%). The work must be performed under the terms of a home renovation agreement entered into between December 31, 2008 and January 1, 2010, and must be fully paid for before July 1, 2010.

Eligible expenses include the cost of labour and materials supplied by a contractor – do-it-yourself projects do not qualify. The work must be performed on a dwelling built before 2009 that you own and occupy as a principal residence. Seasonal or vacation properties are not included. Also note that expenditures for lot improvements, such as driveways and fences, do not qualify for the credit.

HRTC– Federal Government

The federal tax credit is less generous, but applies to a broader range of expenses than the Quebec credit. The HRTC is calculated as 15% (12.525% for Quebec residents) of eligible expenditures between $1,000 and $10,000, resulting in a maximum credit of $1,350 (($10,000 - $1,000) x 15%). Eligible expenses must be incurred between January 27, 2009 and February 1, 2010.

Unlike the Quebec home renovation program, the Federal home renovation program applies to any dwelling that you own and personally use, including your home and cottage. Eligible expenses include interior and exterior painting, installation of swimming pools, driveway resurfacing, and landscaping, as well as projects such as kitchen and bathroom renovation, new flooring, and roof re-shingling. The cost of materials, equipment rentals, and permits for do-it-yourself projects is also eligible.

If you’re planning some renovation projects, talk to your PWL advisor about the tax implications.