Did you buy, build or sell a home this year? Did you finally do those renovations you had been putting off? There are home renovation and improvement tax credits that you may be eligible for to help offset the cost of your project. But how do you know if your home qualifies for these tax credits? This will depend on the kind of renovation projects you did to your home and the type of taxes you pay. Let’s look at how you can utilize home renovation tax credits to deduct from your income tax.
These tax credits can be used to make significant improvements on your home and increase the accessibility and safety for people over the age of 65 who live with you like a spouse or other family member. These tax credits have been created to make improving your home easier. Your construction and renovation expert will be able to help ensure that the changes you make fall within the eligibility guidelines. There are grants available to not just make your home safer, but more energy efficient too.
Remember, it’s important to ensure you meet the eligibility requirements for these programs especially since they vary from between provinces. Let’s review some of the common questions homeowners may have about the home renovation and improvement tax credit, and how you can utilize these programs to make your home safer and more comfortable for those you care about.
What’s a tax credit?
A tax credit is a portion of money a taxpayer can subtract from what they owe when they file their taxes each year. These deductions lower the amount of taxable income and reduce the amount of tax owed. The tax credit depends on the type of credit being put through and whether or not it applies to individuals or businesses. The location, classification, and industry the credit is assigned to can also play a role in the amount that can be deducted.
Ontario Home Renovation and Improvements Tax Credits
Ontario has developed a number of home renovation grants in Ontario for 2022. These programs help to make renovating your home easier. These programs are available to all Ontario residents. An accountant will be able to help you navigate this portion of your taxes to ensure you get the maximum allowable credit for your home renovation project.
Ontario Seniors’ Home Safety Tax Credit
This credit is designated for seniors, allowing them to receive up to $2,500 in deductions on their Ontario income taxes. This is meant for home renovations designed to improve safety that help to prevent falls or other injuries at home. The tax credit includes a variety of home renovation features including the installation of grab bars, rails and other bathroom fixtures to improve accessibility and safety. Homeowners can also improve their stair treads and add smoke alarms to receive this tax benefit. The deduction is 25 percent of qualifying expenses up to $10,000.
Determining if you are eligible
- You must be 65 years old by the end of the tax year to receive this benefit
- Your home renovation must be completed within the year you are making the claim
It’s important to remember that these claims can only be made towards your primary residence, not a vacation home or second home.
What if you are the homeowner making renovations, but not a senior?
If you live with a senior and are making upgrades to improve the safety of your home, you might also be eligible for this tax deduction. You must, however, be a qualifying relation to the senior resident.
Ontario New Housing Rebate for Substantial Renovations
Have you completed a substantial home renovation in the last year? You may be eligible to receive $16,080 to $24,000 in rebates paid on HST. If you paid HST on the purchase of your building then you may be eligible for rebates up to 75 percent of your HST paid for eligible construction costs and materials.
To qualify, the property’s fair market value must not exceed $450,000 after the completion of renovations. You must apply for this rebate within 2 years of completing the renovation. It’s also important to remember this rebate only applies to renovations where more than 90 percent of the house has been replaced.
Multigenerational Home Renovation Tax Credit
Are you ready to make upgrades to your home to help a senior live a more comfortable life? Then you may qualify for the Multigenerational Tax Credit. This credit can be applied to the primary residence of the senior. However, certain cost eligibility requirements must be met.
This home tax credit is designed to help everyone gain access to owning a home. The credit gives 15 percent in non-refundable tax credits on eligible renovation expenses up to $50,000. This is helpful in the creation of additional suites on a property or significantly improves accessibility and mobility.
This credit can only be applied to individuals making improvements to their home for a close family member or relative such as a parent, grandparents, children, and siblings. Consult with your tax professional to ensure you qualify before starting any renovations.
Federal Home Accessibility Tax Credit
If you are planning a home reno, then you may want to look at the HATC as an option to recoup some of your expenses. This non-refundable tax credit can be applied to home renovations and alterations that improve access or mobility within the home.
HATC is based on the lowest personal income tax rate of 15 percent in 2022 to an amount that is currently the lesser of $10,000 and the eligible expenses of an eligible dwelling for the year of taxation. The taxpayer may claim a tax credit of up to $1,500 towards home renovation expenses.
The credit only applies to expenses incurred for work or goods acquired to complete the qualifying renovation.
In 2022 and subsequent taxation years, the Budget proposes to increase the annual expense limit of the HATC from $10,000 to $20,000. This will improve the tax credit, raising it to $3,000. The rules regarding eligibility will not change.
Canada Greener Homes Grant
Starting in January 2023, applicants may apply for the Canada Greener Homes Grant through Enbridge. You have likely already received information about this program in the mail. Until this time, the Canada Green Homes Grant portal is still available for Canadians looking to make significant improvements to their homes. The Canada Green Homes Grant offers a number of credits to encourage Canadians to take the next step in creating a greener home.
Canadians may be eligible to receive:
Grants from $125 to $5000 to assist with the cost of home retrofits
Up to $600 towards the total cost of a pre-and post-retrofit EnerGuide evaluation
$5,000 to $40,000 in interest-free loans towards the cost of major home retrofits
The government has not approved any third party organizations to contact those wishing to take part in these programs.
Save Money While Renovating Your Home
A Canada home renovation tax credit can help save you thousands of dollars towards the cost of home renovations. These are some of the most popular questions people have about improving the look and value of their home with a renovation.
There are a number of upgrades and renovations you can make to your home to make it safer and more accessible for ageing family members.
These are a few examples of how to improve your home’s accessibility:
- Expand doorways to make room for wheelchairs
- Install grab bars in bathroom
- Install seat in bathroom
- Do a tub to shower conversion
- Lower kitchen countertops
- Stair modifications like lifts and elevators
Contact the Pros
Contact the experts at Odima Construction for a free estimate or to arrange a consultation. We are proud to help you create the best and safest living conditions for you and your loved ones.
Odima Construction offers a wide array of services including full home renovations, exterior renovations, home additions, and custom homes.