Tag Archives: home renovation tax credit
There are many opportunities for condo owners to reap the benefits of the home renovation tax credit
Adrienne Brown – Yourhome.ca
If the term “Home Renovation Tax Credit” brings to mind images of detached houses in the suburbs and not units in sky-high buildings, you’re not alone. Many condo owners are paying little attention to the credit when they could be reaping the benefits.
In fact, there are many opportunities for condo owners to claim the credit, including some outside of their own units.
Condo owners can claim a portion of improvements made to their building between Jan. 27, 2009 and Feb. 1, 2010, as long as they were at least partially responsible for paying for the upgrades.
Here’s how it works:
Assuming each condo owner pays a monthly fee to a condo corporation, repairs or renovations completed and paid for with that money should count toward the HRTC. The condo corporation is simply paying for these goods and services on behalf of all of the unit owners.
Condo corporations are unable to claim the credit because it is available only to individuals, so it’s up to each person to claim his or her portion.
Therefore, on their 2009 taxes, condo owners can claim the credit for renovations to their own unit – similar to what would be done in a detached home, for example – as well as their share of any renovations to common areas paid for by the condo corporation.
This could include anything from new windows installed in your building to a redesigned lobby area or improved landscaping.
Add these shared costs with renovations you may have done to your individual unit (bathroom or kitchen upgrades, new fixtures, painting) and you could significantly increase your credit.
Canada Revenue Agency guidelines for condo owners indicate that improvements made to common areas will qualify if:
– You own your unit. Renters are out of luck, even if they pay similar monthly fees.
– “The expenses would be eligible expenses if the common areas were treated as an eligible dwelling”. If new furniture wouldn’t count in a detached home, it won’t count in a condo either.
– Your condo corporation has notified you of your share of the expenses.
As a reminder, the tax credit applies to renovation costs over $1,000 and under $10,000, so if you spent a few hundred dollars on your own unit and the condo corporation spent a few hundred more on your behalf, that may be the difference between getting a return or not.
What you’ll need to make the claim:
Since you’re not dealing directly with stores or contractors and won’t receive original receipts or invoices, in order to claim your portion of building renovations you need documentation from your condo corporation. This can be in the form of a letter and must be signed.
Most condo corporations have a set of guidelines that help them determine the allocation of expenses for common areas. It is this documentation that will guide them in establishing each condo owner’s contributions to renovations and therefore how much people can claim.
According to Canada Revenue Agency, the documentation “must clearly identify the type and quantity of goods purchased or services provided” and also include the following:
– The cost of the renovations
– Your portion of the expenses (exactly how much you are considered to have contributed)
– Contact information for the vendor or contractor (including GST/HST number, if applicable)
– A description of the work in question
– The date or dates the work was completed.
If you do not receive documentation for improvements to your building, it is worth asking about. It could mean a few more dollars in your pocket!
For many Canadians, financial matters are about as enjoyable as their yearly physical exam, but it’s something that should be done just to be sure everything is as it should be.
This is particularly important in these times of a low-rate environment.
Homeowners should become proactive about their overall financial health by taking a close look at one of their most important obligations – their mortgage, says Gary Siegle, Calgary-based regional manager for Invis.
“A mortgage isn’t something you sign once every few years and then forget about,” says Siegle. “Life can change substantially in a year and a regular review can help ensure that your mortgage is still the right fit for your financial situation.”
Don’t kid yourself, says Siegle – a number of major life changes may call for looking over your mortgage, such as starting or growing a family, starting a business, loss or interruption of income, home renovations, purchasing investment property or other major expenditures.
A mortgage professional can assess a homeowner’s current interest rate, payments and other mortgage terms, determine available home equity, and recommend options that may help them better reach their goals.
So given all that could happen in just 365 days, Siegle offers some common reasons to revisit your mortgage:
- Paying down your mortgage faster – If you receive extra cash like an inheritance, tax refund or a work bonus, think about putting it toward your mortgage.
For example, paying an extra $3,000 once every year toward the principle on a $250,000 mortgage can result in interest savings of $42,443 over the life of the mortgage, assuming a 25-year amortization and a fixed rate of 4.19 per cent.
- Lowering monthly payments – Renegotiating for a lower interest rate can protect your finances from unforeseen factors like a reduced income and allow you to save up a rainy day fund.
- Debt consolidation – Transferring high-cost consumer debt, such as moving a credit card balance to a lower interest rate by consolidating it into your mortgage, can help you boost your cash flow to build up savings or pay down your debt faster.
- Securing a home equity line of credit – A line of credit can help you access lower-cost
funds for investing, such as topping up your RRSP contribution for the year. It can also help you pay for home improvement projects so you can take advantage of the federal Home Renovation Tax Credit for eligible projects done before Feb. 1.
- Improving credit – A mortgage professional can coach you on how to improve your credit score, which can help you work toward future goals such as buying a vacation property for your family.
In some cases, a mortgage check-up may show that refinancing could improve your mortgage strategy. However, most mortgages require the borrower to pay a penalty if they pay off their mortgage in full before the maturity date.
A mortgage professional can provide advice on what penalties you may incur and if refinancing is indeed your best option.
“In the end, a yearly mortgage checkup could reveal that the best course of action is no change at all,” says Siegle. “Mortgage professionals can be excellent resources to help homeowners better understand their financing options, whether they’re buying a new home or staying put.”