Home accessibility tax credit worth the wait for qualifying renovations
If you’re a senior or a person with a disability, or family member who lives with them, you may want to delay your home reno project by a few months if you think it may qualify for the new “home accessibility tax credit.”
The HATC credit, worth up to $1,500, was announced in the 2015 federal budget, and passed into law this summer. It takes effect in 2016. It’s a non-refundable credit that provides federal tax relief of 15 per cent of up to $10,000 of eligible expenditures per calendar year, per qualifying individual.
To qualify, you must be either at least 65 years of age or be eligible for the disability tax credit. Certain other eligible individuals, such as a spouse or partner, a parent, grandparent, child, grandchild, brother, sister, aunt, uncle, niece or nephew of the qualifying individual may also qualify for the tax credit.
An eligible dwelling for the purpose of the HATC is typically your principal residence, meaning a house, cottage or condominium unit that is owned, jointly or otherwise, by you and/or your spouse or partner, and ordinarily occupied by you during the year.
If you don’t own your own principal residence, a dwelling can still be considered eligible for the purposes of the HATC if it’s the principal residence of an eligible individual, as discussed above. In other words, if you’re a qualifying individual who lives with a relative, their dwelling will be considered eligible for the credit.
For the expenditures to qualify for the HATC, the renovation or alteration must allow the qualifying individual to gain access to, or to be more mobile or functional within the dwelling, or reduce the risk of harm to the qualifying individual either when gaining access to the home or within the dwelling itself.
As well, to qualify, the improvements must be of an enduring nature and be considered “integral” to the eligible dwelling. Typical examples of eligible expenditures include: wheelchair ramps, walk-in bathtubs, wheel-in showers and grab bars. The cost includes cost of labour and professional services, building materials, fixtures, equipment rentals and permits. Items such as furniture, however, as well as items that retain a value independent of the renovation (such as construction tools or equipment used in the renovation), aren’t considered integral to the dwelling and thus don’t qualify for the credit.
The government provided some examples of expenses that don’t qualify, including: expenditures for household appliances and devices, such as audio-visual electronics; payments for services such as outdoor maintenance and gardening; housekeeping or security; and the costs of financing a renovation, for example interest on a home renovation line of credit.
And just because you’re claiming the HATC doesn’t mean your renovation is necessarily excluded from existing tax relief or other government incentives. For example, some renovations that qualify for the HATC may also qualify for the medical expense tax credit and therefore you can claim both credits starting next year. Similarly, some provinces also offer provincial home accessibility tax credits for seniors, which again you could continue to claim, notwithstanding the HATC.
Finally, don’t forget to keep those receipts as the government requires any eligible expenditure claimed for the HATC to be supported by valid documentation.