Facts on Canada's new renovation tax credit

The economy is in trouble, and so is your front lawn. The government has come up with a tax credit that hopes to address both problems.

This year’s federal budget contains a new Home Renovation Tax Credit (HRTC). If you spend between $1,000 to $10,000 on work or goods for the renovation of your home or cottage, you can apply for a 15 per cent credit on your family’s 2009 income tax return. The maximum amount of tax relief is $1,350. You must have the work performed or materials purchased between January 27, 2009 and February 1, 2010.

So, what exactly is eligible for the credit? Well, there are the big things, such as renovating your kitchen, getting a new furnace or building an addition. But the little things count, too: painting the house (inside and out), laying new sod and adding new fixtures (lights and fans). Renovations that make your home more energy efficient are often eligible for further rebates. For example, if you are putting in a high-efficiency furnace this year, you might qualify for the ecoENERGY retrofit program, which would lower the final cost of the project even more. (For more on rebate programs, see www.canadianhomeworkshop.com/ecorebates.) Not eligible for the credit are such things as new tools (pity), furniture, audio/visual electronics (also a shame) and regular maintenance such as furnace cleaning, snow removal and lawn care.

The goal of the HRTC is to encourage Canadians to spend money on renovation materials and services. Since many of the products and services come from within the country, the money spent should ease the sting of the current economic downturn. But are Canadians sold on the idea?

Canadian Home Workshop’s online poll found that only 10 per cent of respondents would start renovating because of the tax credit. For 61 per cent, the HRTC is a bonus, providing a bit of a financial break for work that they had planned to do anyway. However, 29 per cent said they would hold steady and hold off renovating. Those in the last category may be looking at their wallets and deciding that, tax break or no tax break, this just isn’t the time for new renovations.

The HRTC still requires you to have the money, or the credit, to pay for goods or services. The help comes next year at tax time. For the majority of respondents who will be renovating this year, they should save their receipts and check out the Canada Revenue Agency’s website for full details.

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