Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Are renovation expenses incurred at a rental property eligible for the HRTC?
Position: No. Expenses undertaken at a rental property are not qualifying expenditures.
Reasons: A rental property will not likely be an eligible dwelling as it would not likely be ordinarily inhabited by a taxpayer or his/her family.
XXXXXXXXXX
Dear XXXXXXXXXX :
Thank you for your correspondence received on August 6, 2009, asking whether renovation expenses undertaken at a rental property that you own, but that is not your current residence, would qualify as eligible expenditures for the new home renovation tax credit (HRTC).
The proposed HRTC will provide individuals with a temporary 15% non-refundable income tax credit on eligible home renovation expenditures for work performed, or goods acquired, after January 27, 2009, and before February 1, 2010, for agreements entered into after January 27, 2009. Taxpayers can claim this credit for the 2009 tax year on eligible expenditures exceeding $1,000, but not more than $10,000, which will result in a non-refundable tax credit of up to $1,350.
The legislation regarding the new HRTC, which was introduced in the federal budget tabled on January 27, 2009, has not yet been made law. However, the draft legislation publicly released on September 14, 2009, states that expenditures will qualify if they are directly attributable to a renovation or an alteration of an eligible dwelling, including land that forms part of the eligible dwelling, and if the renovation or alteration is of an enduring nature and is integral to the eligible dwelling. Such expenditures will include the cost of labour and professional services, building materials, fixtures, equipment rentals, and permits.
An eligible dwelling is a housing unit located in Canada that is owned by the individual, at the time of the renovation, and ordinarily inhabited by the individual, his or her current or former spouse or current or former common-law partner, or his or her children at any time after January 27, 2009, and before February 1, 2010. Therefore, any housing unit that an individual owns and uses personally, including a home and a cottage, qualifies for the HRTC.
Although a renovation may be of an enduring nature and integral to the dwelling, if you own and use your entire property for earning rental income, the property will not be an eligible dwelling. Therefore, any renovation expenditures incurred for that property will not qualify for the HRTC.
You can find more information on the HRTC on the Canada Revenue Agency Web site at www.cra.gc.ca/hrtc and in the enclosed Government of Canada brochure, which is also available at www.actionplan.gc.ca/grfx/docs/HRTC_eng.pdf.
I trust that the information provided is helpful.
Sincerely,
Jean-Pierre Blackburn, P.C., M.P.
Enclosure
Robert Dubis
(905) 721-5191
2009-033627
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