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: Is the home renovation tax credit applicable to individuals who own a leasehold interest in RV lots and/or condominiums?
Position: No.
Reasons: An eligible dwelling, for purposes of the HRTC, does not include a leasehold interest in a housing unit. A leasehold interest in a RV lot is not considered to be owned by the individual. As a result, the lots will not form part of the individual's eligible dwelling and any renovations made to the lots will not qualify for the HRTC.
XXXXXXXXXX 2009-033774
N. Shea-Farrow
December 7, 2009
Dear XXXXXXXXXX :
Re: Home Renovation Tax Credit - Leaseholders
This is in reply to your letter dated August 12, 2009 asking whether the home renovation tax credit (HRTC) is applicable to individuals who own a leasehold interest in RV lots and/or condominiums.
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request as set out in Information Circular IC 70-6R5 "Advance Income Tax Rulings" dated May 17, 2002. Where the particular transactions are completed the inquiry should be addressed to the relevant Tax Services Office. We are, however, prepared to offer the following general comments, which may be of assistance.
Our Comments
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, was introduced in the House of Commons on September 30, 2009, by the Honourable James M. Flaherty, Minister of Finance. The proposed legislation 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.
An eligible dwelling, for purposes of the HRTC, does not include a leasehold interest in a housing unit. Therefore, a leasehold interest in a condominium unit will not be an eligible dwelling and the leaseholder will not be able to claim any expenditures incurred to renovate their unit or their share of expenditures incurred to renovate the common areas of the condominium.
Generally, land of 1/2 hectare (1.24 acres), including the land upon which the individual's housing unit stands and any portion of the adjoining land, will be considered part of the individual's eligible dwelling if the individual owns the land. Since the individuals only have a leasehold interest in the RV lots, the lots are not considered to be owned by the individuals. As a result, the lots will not form part of the individual's eligible dwelling and any renovations made to the lots 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.
We trust that these comments will be of assistance.
Yours truly,
Nerill Thomas-Wilkinson
Acting Manager
for Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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