There is still a lot of confusion around the eligibility for the Federal Home Renovation Tax Credit.  At this time, the credit has not been legislated in the Income Tax Act, nor has draft legislation been released, but  some information is available on the Federal website.  A recap of eligible and ineligible expenses are listed below.

Canadian Homeowners can claim a 15% non-refundable tax credit for the eligible expenditures exceeding $1000, but not more than $10,000 which works out to a maximum credit of $1,350 which can be claimed on 2009 tax returns.

ELIGIBLE EXPENSES:

• Windows/Doors
• Flooring
• Furnace, boiler, woodstove, fireplace, water heater, oil tank
• Ventilation systems
• Central Air
• Reverse osmosis systems
• septic system
• well upgrades
• electrical wiring
• security systems
• solar systems
• painting
• building of additions, sheds, garages, decks
• roofing
• driveway resurfacing
• exterior shutters/awnings
• permanent installation of pools or hot tubs
• pool resurfacing
• solar heaters/heat pumps for pools
• landscaping – sod, perennials, trees, rock, lighting, water features, retaining walls
• interior fixtures – blinds, shades, shutters, lighting, fans
• kitchen, bathroom, basement renovation
• labor expenses for all of the above

INELIGIBLE EXPENSES

• furniture, appliances, AV
• tools
• cleaning/maintenance
• maintenance contracts
• financing costs

In order to be eligible for the tax credit, the work must be completed between January 27th, 2009 and February 1, 2010 and claimed on your 2009 tax return.  For more information visit the CRA website at http://www.cra-arc.gc.ca

Most Canadian homeowners are not only unaware they’re eligible for a federal tax credit, but they’re probably already spending money they could be claiming on their next return, a recent study has shown.

The Home Renovation Tax Credit was announced in January’s federal budget as an incentive to boost spending and stimulate the economy. Canadians renovating their homes and cottages can claim between $1,000 and $10,000 per family and receive a 15 per cent credit on their tax return.

“People are not used to this kind of credit, where it’s so encompassing that they’re missing out,” says Doug Northrup, master tax specialist at H&R Block in Moncton. “They don’t understand exactly what it is or how extensive it can be.

“It covers things like kitchens and bathrooms, windows and doors, but it can also do things like putting in a new well or home-security system, putting a new driveway in or doing some landscaping as well.”

A recent Angus Reid poll showed most people do not realize the full scope of the credit. Most Atlantic Canadians scored lower than 50 per cent on a quiz of what projects qualify and 95 per cent said they knew “little or nothing” about the program.

Robert Hunter, president of Avalon Developments renovation and contracting company, says the main thing stopping people from taking advantage of the program is concern about the economy.

“I think it’s been well-communicated,” he said. “I think they’re maybe a little more hesitant with their dollars. After all, you do have to spend a lot of money to get anything back.

“If I were to guess, I’d say people would probably take advantage of it a little later on (in the summer). Maybe it will pick up when they see the economy has stabilized or if they get some more positive news. It’s hard to read.”

Northrup says the program includes several simple improvements around the house that many people don’t expect to be able to claim.

“It’s not something you have to have a contractor come in and do. You can turn around and do it yourself, you just have to have all your receipts,” Northrup says, adding Revenue Canada’s website contains information detailing what work qualifies, as well as forms to help people file their returns.

For example, a fresh coat of paint on the inside or outside of the house, building a new deck or even planting new perennial flowers and shrubs are all do-it-yourself projects that qualify for the credit.

“I’m sure 90 per cent of the people who go to garden centres and buy perennials have no idea to keep the receipts for those,” Northrup says.

“When people think home renovations, they don’t think it extends to the garden as well.”

In addition, projects that also qualify under the government’s energy efficiency retrofit plan can be claimed twice.
Northrup noted, however, that some things don’t qualify, such as furniture, tools or cleaning up from construction.

“Other than that, there’s not much on the list that isn’t eligible,” he says.

In order to qualify for the credit, work must be paid for before Feb. 1, 2010.

The Angus Reid Strategies poll was conducted from June 5 to 11, 2009. It surveyed 1,398 randomly selected Canadian homeowners, with a margin of error of plus or minus 2.6 per cent, 19 times out of 20.

*This article was featured in the Times & Transcript and from Rita Singh, First National