Are Home Renovations Tax Deductible in Canada?

Once tax season comes, it has many scrambling to find all expenses that can be tax-deductible. But, when it comes to tax deductibles, it can be tricky to know what expenses would count – especially big expenses.

Many homeowners in Canada have wondered if they could potentially count home renovations as tax-deductible. It makes sense since they can be a big expense made during the year, especially for those who have done complete home renovations.

Homeowners might be surprised to find tax-deductible opportunities through Canada’s home renovation tax credits if they are eligible. Learning these conditions and knowing you can apply can help to save a lot more this tax season!

Which Home Renovation Tax Credits are Available?

Canada has two available home renovation tax credits – the Home Accessibility Tax Credit (HATC) and the Canada Greener Homes Grant. See what these home renovation tax credits entail to see if you qualify!

Home Accessibility Tax Credit (HATC)

Many homeowners might be surprised this tax credit has been around since 2012! Homeowners had received a 10% tax credit from this (or $1,000 per year).

A homeowner qualifies if they have done home renovations designed to increase the accessibility of their house. These are geared towards homeowners to improve the life of a person with a disability (including themselves) and seniors.

Currently, in 2022, the budget will be expanding upon this credit. Any home renovations made after January 1, 2022, will be eligible for a maximum $3,000 deduction.

Read Also:

• Property Taxes on a New Home in Canada Explained
• Can I Get a Tax Credit for Energy Efficient Windows?
• The Importance of Knowing Value of Your Property

The Canada Greener Homes Grant Initiative

Have you done any more energy-efficient home renovations? If so, you may be eligible for The Canada Greener Homes Grant!

The government of Canada hopes to promote greener practices by rewarding homeowners that make environmentally friendly home renovations by aiming to invest over $2 billion through the grant.

The beauty behind this is that it is tax-deductible, and homeowners can choose from various options for eligibility. The grant will cap out at $5,600 per home, or $40,000 for deep retrofits in 2021 and 2022.

Which Home Renovation Expenses are Eligible?

When it comes to home renovations, it’s important to know what ones count. Not everyone might have the same idea of what expenses would be eligible.

See below what expenses are valid for tax deductibles for the two available tax credits.

Eligible Home Accessibility Tax Credit (HATC) Renovations

Here are a few home renovations that would count as such:

• Handrails, balance bars, etc
• New door locks
• Motion sensor lights
• Lowering countertops
• Non-slip flooring
• Touch-and-release infrastructure
• Door widening
• Elevators and wheelchair ramps

Eligible Renovations with the Canada Greener Homes Grant

Here are a few home renovations that would count as such:

• Home Insulation – Can use up to $5,000 in insulation for attic/ceiling, exterior wall, exposed floor, basement/foundation, and crawl spaces.
• Air-Sealing – Can spend up to $1,000 as long as they’re energy-efficient.
• Windows & Doors – Each rough opening is eligible for either $125 or $250 as long as they promote energy efficiency.
• Thermostats – Can spend up to $50 but must be combined with another energy efficiency retrofit.
• Space & water heating – You can spend up to $5,000 on ground source heat pumps, air-source heat pumps, and cold climate heat pumps. Heat pump water heaters are a maximum of $1,000.
• Renewable Energy – Can spend up to $5,000.
• Resiliency Measures – Can spend up to $2,625 when combined with another energy efficiency retrofit.

Which Home Renovation Expenses are Ineligible?

See what you can’t be eligible for to avoid attempting to qualify for a tax credit.

Ineligible Home Accessibility Tax Credit (HATC) Renovations

Here are a few home renovations that would not count:

• Landscaping or aesthetic changes
• Appliance upgrades
• Insulation changes
• Wheelchairs & Walkers
• Smoke alarms & carbon monoxide detectors
• New roof, window, or flooring

Ineligible Renovations with the Canada Greener Homes Grant

Here are a few home renovations that would not count:

• Any retrofits are done before a pre-retrofit evaluation.
• Any retrofits are done before December 1, 2020.
• Eligible products installed in new home additions built between the pre-and post-retrofit EnerGuide evaluations.
• Leased or rented equipment.
• Air conditioners.
• Tankless or storage water heaters other than heat pump water heaters.
• Skylights.
• Furnaces (unless you live in a northern or off-grid community).
• Boilers (unless you live in a north or off-grid community).
• Roofs.

Knowing what tax credits are available, you can now see if you qualify and if any home renovations you made are eligible. By going for these tax credits, you can end up using these for tax deductibles that will save you lots this tax season!