How to save on your renovation
In its 2009 budget, the federal government introduced the Home Renovation Tax Credit (HRTC), which offers significant savings to homeowners carrying out a wide range of home improvements. This temporary measure is designed to increase spending and boost the economy.
In order to qualify, the work must be completed by January 31, 2010, so if you’ve been planning a home renovation, this may be the time to act.
The Home Renovation Tax Credit can be used for most renovations to a house, condominium, or vacation home. The credit covers up to $10,000 worth of enduring changes (regular maintenance doesn’t qualify), with a maximum tax reduction of $1,350. It can be applied to more than one renovation project. That means it could make sense to combine two planned renovations to take advantage of the full amount available.
As well, the credit has a bonus feature: It can be “piggybacked” onto other government benefits that may apply to the same project. For instance, you can combine the credit with the ecoENERGY Retrofit grant for energy-efficient renovations.
Here are a few suggestions for renovations that make use of the HRTC on its own, or in combination with other government incentive programs.
Install a new, more efficient furnace. Eligible for the HRTC plus a federal ecoENERGY grant of $375 to $790 — in addition to the yearly savings from lower fuel bills.
Add insulation and weathersealing, new doors and windows. Eligible for the HRTC and an ecoENERGY grant, plus energy savings. The ecoENERGY grant will vary depending on the extent of the work and energy efficiency achieved.
Retrofit your home for a disabled family member. Combines the HRTC with the federal Medical Expense Tax Credit for necessary alterations that make the home more accessible.
Renovate your kitchen or bathroom. Eligible for the HRTC. Kitchen and bathroom renos typically give you maximum payback value when your home is resold.
Build an addition to your home or vacation property. In addition to the maximum HRTC, this may increase your vacation property’s resale value and make your home more livable.
Once your renovation is complete, the new tax credit can be claimed on your 2009 tax return, or on that of your spouse or common-law partner. As well, couples can divide the credit between them to get the maximum tax benefit.