How can Home Renovation Tax Credit help you in Canada?
Home renovation or HRTC can add value to your house in the long run. The ripple effects of subprime mortgage crisis affected Canadians too. As such the government in Canada has introduced Canada’s Economic Action Plan. The main aim of introducing this is to stimulate the economy, increase employment and help those in financial distress.
The Home Renovation Tax Credit action plan is expected to help as many as 4.6 million Canadian households. This is a $3 billion tax support that is expected to help homeowners intending to renovate their homes. This economic action plan will provide relief to homeowners renovating their houses or expenses incurred on goods bought/likely to be bought between January 27, 2009 and February 1, 2010. This period is usually referred to as the eligibility period. It is mandatory that the renovation has to take place in the individual’s principal residence. This is referred to as eligibility dwelling. Reports suggest that this is a “timely, temporary and targeted” stimulus package to revive the economy in Canada.
How does the economic action plan work? According to the plan, a homeowner intending to renovate his house can enjoy a tax benefit of 15% on expenses ranging between $1000 and $10,000. In other words, you can avail a maximum tax benefit of $1350. This tax benefit can be availed when you file your tax return for 2009.
You can claim the tax credit renovation work related to houses, condominiums, cottages that belong to individuals who use it for their personal use. Tax credit is also applicable for re-modeling a kitchen, expenses for building permit, incidental expenses, rental of equipments, professional services etc.
However, tax credit is not applicable for routine maintenance as well as repair work. Expenses incurred on buying furniture, electronic appliances, equipments for construction etc.
What are the documents that will be required to avail tax benefit? Relevant receipts, agreements, invoices must reflect clearly the product specifications. This includes quantity of goods bought or services offered.
- Documents should include description of goods and the date of purchase.
- Date of delivery of goods
- The date when the work was carried out
- The address of the place (eligibility dwelling) where the work was carried out.
- The cost incurred
- Proof that you have made the required payments
- Make sure you keep the invoice as well as the receipts carefully.
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