As part of the 2012 provincial budget, the B.C. government created the home renovation tax credit, similar to the one that was created by the federal government previously for only the one year.
This B.C. tax credit is an ongoing credit, available to seniors who were 65 or older as of Dec. 31, 2012 and had some substantial work done on their home that would improve their accessibility or mobility.
This can also be claimed by someone living with a senior who has had their home substantially modified to care for the senior as well as a family member who modified their senior parent’s home and incurred all the expenses.
Just looking back at tax season, I don’t believe that any of our clients claimed this credit on their 2012 tax returns.
Well, the good news is that we can still do an adjustment to your 2012 return and claim this credit.
This credit is considered a non-refundable tax credit, which means that if your income is not high enough to take advantage of this credit, it is lost and will not be refunded to you.
This credit is family based, so you can split the credit with your other family members that may have a higher income, or you can transfer it to another family member.
Family as defined by the Canada Revenue Agency is you, your spouse or common-law partner and your children or your spouse’s or common law partner’s children. So if your son incurred expenses to upgrade your house, then the son would be able to take advantage of the credit even though he did not reside in the same home.
The tax credit is calculated based on eligible expenses of up to $10,000 which will provide a tax credit of 10 per cent of the amount spent to a maximum of $1,000.
The first condition is that the property being renovated is considered to be your principal residence, which means that you own the home/property and that you or a family member lived in that property for at least one year.
The next condition is that it must be an eligible expenditure.
Here is a partial list of what you can claim:
• grab bars and any reinforcements around the bath, tub or shower
• handrails in corridors
• wheelchair ramps, lifts and elevators
• wheel-in showers
• widening of passage doors
• lowering of existing counters and cupboards
• installation of adjustable counters/cupboards
• light switches placed in accessible locations
• door locks that are easy to operate
• lever handles instead of door knobs
• pull-out shelving in the kitchen
• non slip flooring in the bathroom
• hand-held showers
• additional light fixtures
• hands free taps
• motion activated lighting
• touch and release drawers and cupboards.
The expenses that are not eligible are those expenses whose purpose it would be to increase the value of the home or for general maintenance such as plumbing repairs, roof repairs, landscaping, installation of new windows or regular flooring, heating and air conditioning systems, and replacement of insulation.
The devices that would not be eligible are those for home medical monitoring, home security systems, wheelchairs; walkers,vehicle adaptations, side swing ovens and appliances with front located controls, fire extinguishers, and smoke alarms and carbon monoxide detectors.
The services not eligible are security or medical monitoring services, home care services, housekeeping, outdoor maintenance and gardening.
The great thing about this credit is that if the enhancement also qualifies as a medical expense, it can be claimed as both a medical expense and the B.C. home renovation tax credit.
What does your accountant need from you? We will need to see your receipts, agreements and invoices.
These documents must have the following information on them at a minimum in order to be considered for the credit:
• name of the vendor or contractor, business address and GST number, if they have one
• description of the goods purchased, delivered or services performed and the address of where the work was performed
• proof of payment which should be a credit card slip or cancelled cheque.
If the work was performed by a family member, the labour is not deductible, but the materials would be.
You will be required to hang onto these documents for six years in case the Canada Revenue Agency needs to see them. For more information, please refer to the CRA website or the government of BC website.
Remember that at this point, (unless they change the provincial budget) this tax credit will not end and will be available for any work done during the 2013 tax year to be claimed on your 2013 tax return.