15 December 2009 External T.I. 2009-0332221E5 - Eligible expenditures- home renovation tax credit

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: Does the repair of a crack in a wall and replacement of a water damaged wall qualify as an eligible expenditure for the HRTC?

Position: Yes

Reasons: Eligible expenditures for the home renovation tax credit include only expenditures that relate to a renovation or an alteration of an eligible dwelling (including land) that is enduring in nature and integral to the dwelling. The repair of a crack on a side of a house and replacement of a water damaged wall of the eligible dwelling is enduring in nature and integral to the eligible dwelling (including land) and qualifies for the HRTC.

XXXXXXXXXX 							2009-033222
								George A. Robertson, CMA
December 15, 2009

Dear XXXXXXXXXX :

This is in reply to your correspondence received September 25, 2009, regarding the new home renovation tax credit (HRTC). In particular, you want to know if the repair to a crack on the side of your townhouse and the replacement of a water damaged interior wall would qualify as eligible expenditures for the HRTC. We apologize for this delayed reply.

The situation outlined in your request relates to legislation that has not yet been made law. At this time, we are unable to provide an advance income tax ruling. However, we are prepared to provide the following comments.

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.

Providing all other conditions are met, the repair of a crack on the side of your townhouse and the replacement of a water damaged interior wall are enduring in nature and integral to the eligible dwelling and will qualify as eligible expenditures for the HRTC. Please note that the cost of routine repairs and maintenance normally performed annually or more frequently will not qualify for the HRTC.

You can find more information on the HRTC on Canada Revenue Agency's 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