29 July 2009
Ottawa, Ontario
As part of Canada’s Economic Action Plan, the Harper Government introduced the Home Renovation Tax Credit (HRTC). The HRTC provides a 15% income tax credit on eligible home renovation expenditures for work performed or goods acquired between January 27, 2009 and February 1, 2010. The credit may be claimed on expenditures exceeding $1,000 but not more than $10,000 and will provide up to $1,350 in tax relief.
In order to encourage more Canadian homeowners to take advantage of this tax credit, the Harper Government has launched an innovative partnership with home and building supplies stories throughout Canada. As part of this campaign, store displays will promote the tax credit to prospective customers.
Why Does the Home Renovation Tax Credit Matter?
Renovation projects improve the value of a home and represent a smart long-term investment for home-owners. In addition, many home renovations improve energy efficiency and help homeowners save money.
Of particular importance during the global recession are the local economic benefits of home renovations. Home renovation investments generate local economic activity and create local jobs such as construction jobs as well as more opportunities for carpenters, plumbers and other tradespeople. The increased demand for building supplies also has indirect benefits for those who work in those sectors.
What Does the Home Renovation Tax Credit Cover?
Homeowners will be able to claim expenditures for major renovation projects such as finishing a basement, renovating a kitchen or a building a deck, fence, retaining wall or similar addition to a house. Home improvements such as new carpeting or hardwood flooring, upgrades to a furnace of water heater, resurfacing of a driveway or repainting of the interior or exterior of a house are also eligible.
Ineligible expenses include those that are not of a lasting value to the home. These include tool purchases, new furniture or appliances, as well as snow-clearing, lawn care, carpet cleaning and other maintenance expenses.
Encouraging Trends
Early reports indicate that more Canadians are taking advantage of the opportunity to undertake home renovations in the current year.
A recent survey by Canada Mortgage and Housing Corporation found that 46 percent of Canadians in 10 major centres across the country intend to carry our home renovations this year, an increase of six percentage points from last year.
Statistics Canada reported that, in May, the building and outdoor home supplies stores sector saw sales increase by 1.0%, double the rate of the previous month. Sales in home centres and hardware stores (+1.1%) rose for the fourth consecutive month. Specialized building materials and garden stores posted a 0.8% gain after decreases in the previous two months.
Other Supports for Homeowners
As part of Canada’s Economic Action Plan, the Harper Government also expanded the ecoENERGY Retrofit program which provides grants to homeowners who undertake approved renovations to improve the energy efficiency of their homes. These grants help generate local jobs and economic activity while helping homeowners an average of $500 on their bills.
Since the beginning of April, an average of more than 21,000 homeowners a month have had pre-retrofit energy evaluations completed — an increase of more than 75% compared to April 2008. In addition the average grant paid to homeowners since April 1, 2009, has increased by almost $300 to more than $1,400.
The Harper Government also introduced the First-Time Home Buyers Tax Credit which helps new homeowners save on the closing costs of a home. In addition Canada’s Economic Action Plan increases the amount Canadians are allowed to withdraw from their RRSPs under the Home Buyers’ Plan, increasing the limits from $20,000 to $25,000. This $5,000 increase is the first time the limit has been raised since 1992 and means that a couple will be able to withdraw up to $50,000 from their RRSP funds toward the purchase of their first home.
The Canadian Mortgage and Housing Corporation has found that of Canadians in 10 major centres who plan to buy a home this year, almost one-half are first-time buyers — up substantially from last year, when 36 percent of Canadians who bought homes were first-time buyers.
To learn more about, the Home Renovation Tax Credit, the ecoENERGY Retrofit – Homes program, the First-Time Home Buyers’ Tax Credit and increasing RRSP Withdrawal Limits for First-Time Buyers, visit www.actionplan.gc.ca.
