The Home Renovation Tax Credit for Seniors and Persons with Disabilities helps qualifying seniors and people with disabilities pay for certain permanent home upgrades that make their homes more accessible, usable, and mobile. On April 1, 2012, the program for elders (and family members living with seniors) began. The program was renamed the Home Renovation Tax Credit for Seniors and Persons with Disabilities on February 17, 2016, to include people with disabilities (and family members living with them).
A renovation tax credit is an incentive to invest in renovations on homes that lived in at least three years or more by claiming back some of the expenses incurred. The current federal government has set aside 1 billion dollars for this initiative, which can help renovate a home relatively affordable. We will discuss what benefits this program offers, how you qualify, and any drawbacks to it so you can decide if it’s right for your situation.
The renovation tax credit for seniors and persons with disabilities was first introduced in 2007 as a temporary measure that allowed for a non-refundable tax credit on up to $10,000 worth of qualifying expenses. The current government has made this a permanent fixture and raised the cap to $16,000. This new change became effective on January 1, 2017. The definition of a senior has also been expanded from those over 65 to 70 and older.
What Do You Mean by Renovation Tax Credit?
The renovation tax credit for seniors and persons with disabilities is a program that offers a tax break to those that invest in renovations on their homes. It includes your primary residence and rental properties, cottages, and even mobile homes.
The credit is calculated as 15% of the amount spent on renovations up to $16,000. So, for example, if you spend $10,000 on renovations, you would be eligible for a tax credit of $1,500. Remember that this is a non-refundable tax credit, which means it can only reduce the amount of tax you owe dollar for dollar. It cannot be used to create or increase a tax refund.
If you are thinking of renovating your home, be sure to check and see if you qualify for the renovation tax credit. It could save you a lot of money in the long run. In general, an expenditure will qualify for the tax credit if it is made as part of a renovation or alteration of a senior’s “qualified principal dwelling” or the property on which the residence is built, and it is done as follows:
- To allow the senior to gain access to the dwelling or land, or to be mobile or functioning inside it, or
- To lessen the danger of damage to the senior within the home or on the property, or in gaining access to the home or property
Who Administers the Renovation Tax Credit in British Columbia?
The Canada Revenue Agency administers the renovation tax credit, and this federal agency is responsible for all tax credits and deductions in Canada.
How Do You Qualify for the Tax Credit?
To qualify for the renovation tax credit, you must be a Canadian resident or a non-resident that owns and resides in a qualifying property in Canada for at least six months out of the year. The definition of qualifying property has been expanded to include your primary residence and rental properties, cottages, and even mobile homes. If you meet the following criteria on the last day of the tax year, you can claim the credit for the year:
A senior or a family member living with a senior, a person with a disability, a family member is living with a disability and a resident of B.C. (for 2016 and later tax years).
If you qualify for the disability tax credit, this credit is available to you. You may still be eligible if you’re not claiming the disability amount because you’re claiming fees for an attendant or nursing home care. An “eligible individual” is someone who can claim the tax credit was a senior, or a qualifying relation of a senior, on the last day of the taxation year in which a qualifying expenditure was paid in respect of a qualifying renovation to the individual’s qualifying principal residence, and was a senior, or a qualifying relation of a senior, on the last day of the taxation year in which a qualifying expenditure was paid in respect of a qualifying renovation to the individual’s qualifying principal residence.
An individual who is 65 years old or older after the tax year is considered a “senior.” According to the B.C. website, a senior’s “qualified relation” is a child, grandchild, or another family member who lives with the senior. Parents, grandparents, children, grandkids, and other descendants included. Brothers, sisters, aunts, uncles, nieces, and nephews (including in-laws) would be included, but cousins and more distant relatives would most likely be excluded.
What Is the Definition of a Qualifying Property in Canada for the Renovation Tax Credit?
The definition of qualifying property for the renovation tax credit includes your primary residence and rental properties, cottages, and even mobile homes. To qualify, you must own and reside in the property for at least six months out of the year. The renovations must be made to your primary dwelling, which is the place where you spend most of your time (including a non-seasonal mobile home).
The renovation or modification must benefit a senior or a person with a disability in the following ways:
- Improving access to a home or a piece of land
- Improving mobility and functions in the home or on the land
- lowering the risk of injury in the home or on the land.
The primary goal of the renovation cannot be to raise the home’s or land’s value.
What Is the Maximum Amount That You Can Claim on the Tax Credit?
The maximum amount you can claim on the tax credit is $16,000, and it is a lower cap than under the previous government, which capped the amount at $10,000.
What Are the Benefits of the Tax Credit?
The tax credit benefits are that it can help make renovations more affordable. It is also a way to incentivize people to invest in their homes, leading to increased property values down the road.
The tax credit benefits can reduce the amount of tax you owe dollar for dollar. It is also a non-refundable credit, not creating or increasing a tax refund.
The current government has set aside 1 billion dollars for this initiative, which can go a long way in helping to cover the costs of renovations. Another benefit is that the definition of a senior has been expanded from those over the age of 65 to 70 and older, and it can benefit those looking to stay in their homes for as long as possible.
What Is the Drawback of the Tax Credit?
The drawbacks of the tax credit are that it is a non-refundable credit, which means that it can only reduce the amount of tax you owe dollar for dollar, and it cannot be used to create or increase a tax refund. Another drawback is that the cap on the amount claimed has been lowered from $10,000 to $16,000, and this may not be enough for some people to cover the cost of their renovations.
Can You Use Your Renovation Tax Credit to Increase Your Tax Refund?
No, the renovation tax credit is non-refundable, which means that it cannot be used to create or increase a tax refund. However, it could lower the amount of tax you owe dollar for dollar.
Is There Any Restriction on What Type of Renovations Qualify for the Tax Credit?
There are no specific restrictions on what type of renovations qualify for the tax credit. However, the renovations must be completed to increase your home’s livability or energy efficiency. For example, installing new windows or insulation would qualify, while painting your walls would not. The renovation must be completed as soon as possible.
- lasting in nature and essential to the residence or the land on which the residence is built, or
- Modular ramps and non-fixed bath lifts are examples of items that can be purchased and placed as a modular or removable version of a kind that can otherwise be installed as a permanent fixture to the dwelling or the land.
Renovations or Changes That Qualify Include:
· Light switches and electrical outlets should be positioned in easily accessible areas.
· Motion-activated lighting
· Pull-out shelves under the counter allow you to work while seated.
· Wheel-in showers
· Sinks – modifications to allow for use when seated (and insulation of any hot-water pipes)
· To enlarge doorways, swing clear hinges on doors.
· Hands-free tapping
· Taps should be moved to the front or side of the machine for easy access.
· Toilets – elevated
· Elevators, stair/wheelchair lifts, and wheelchair ramps
· Walk-in bathtubs
· Existing counters/cabinets – lowering
· Installing adjustable counters and cabinets
· Door locks that are simple to use
· Passage doors that have been expanded
· Touch-and-release drawers and cupboards
· Non-slip flooring or the ability to use walkers or wheelchairs
· General renovation expenditures – required to provide access to first-floor or secondary suites for the elderly or people with disabilities.
· Around the toilet, tub, and shower, there are grab bars and other reinforcements.
· Hand-held showers with adjustable rods or brackets for high-low mounting
· In corridors, there are handrails.
· Instead of knobs, use lever handles on doors and faucets.
· Light fixtures may be found throughout the house and at the front and back entrances.
Changes That Do Not Qualify:
· Home care services, for example.
· Cleaning services.
· Gardening and outdoor upkeep services
· Services such as security or medical monitoring
· Adapted vehicles for people with mobility issues
· Installation of windows
· Landscaping and redecorating are examples of aesthetic improvements.
· All appliances, including those with front-mounted controls, side-swing ovens, and so on.
· Carbon monoxide detectors, fire extinguishers, and smoke alarms
· Installation of (standard) flooring
· Plumbing and electrical repairs are examples of general maintenance.
· Installation of heating and cooling systems
· Electronics (Electronics) (home-entertainment)
· Medical monitoring devices for the home
· anti-burglary devices for the home
· Replacement of insulation
· Repairs to the roof
How Can Someone Apply for the Renovation Tax Credit in British Columbia?
To apply for the renovation tax credit, you will need to file Form T2091, available on the Canada Revenue Agency website. You will need to provide information about the renovations made and proof of payment. To apply for the renovation tax credit in British Columbia, you must complete Form T2036. This form can be downloaded from the Canada Revenue Agency website. You will need to provide information about your renovations, contact information, and social insurance number.
You can claim the credit when you file your T1 income tax return. Complete Schedule BC(S12): British Columbia Home Renovation Tax Credit for Seniors and Persons with Disabilities. Enter the amount you spent on qualified renovations beside box 60480 on the British Columbia Credits form (BC479).
You must keep any supporting documents, including receipts from suppliers and contractors, to back up your claim. Receipts for labor and materials must include a GST/HST number if a family member did the work.
If you get an invoice at the end of the calendar year and pay it the following year, you must claim the credit for the taxation year in which the invoice was received.
The renovation tax credit for seniors and persons with disabilities in British Columbia is a benefit that can help offset the costs of renovations to your home. It may be worth considering if you plan to make significant changes to your house or build an addition. Many people don’t realize this program exists, so it could be helpful to information for many Canadians looking to renovate. Hope this article helped you with the information you are seeking for. To get the detailed information regarding the program, please visit here.