In the ever-evolving landscape of Canadian tax incentives and sustainability development, house owners sometimes find themselves down with transforming their homes or modifying their guest room. What if they find out that they are getting greeted with the prospect of $7,500 Home Renovation Credit for Canada in 2024?
This could be the golden ticket to a refreshed home as the government has introduced the Multigenerational Home Renovation Tax Credit (MHRTC). This article will delve into the details of the MHRTC, including eligibility criteria, qualifying expenditures, and how to apply for the benefit.
$7,500 Home Renovation Credit
The Multigenerational Home Renovation Tax Credit (MHRTC) in Canada is a refundable tax credit introduced in the 2022 budget. The objective of MHRTC is to financially help homeowners renovate their homes either for sustainability measures or create a secondary unit for a qualifying relative.
Canada Late Tax Filing Penalty 2024
MHRTC provides a credit of 15% of the qualifying costs. The amount can be a maximum of $7,500 home renovation credit per claim. Eligible individuals or multiple people (if costs are shared) can each claim up to combined total of $50,000 for expenditures for one qualifying renovation completed in the fiscal tax year. These qualifying expenditures include:
- expenses for the acquired goods.
- services received.
- work completed by professionals such as electricians, plumbers, carpenters, or architects.
House owners can also claim the amount if they perform the work themselves. In that case, charges for building materials, fixtures, equipment rentals, building plans, and permits are also acceptable.
Highlights of $7,500 Home Renovation Credit
| Name | $7,500 Home Renovation Credit |
| Country of Origin | Canada |
| Regulating body / Department | Canada Revenue Agency (CRA) |
| Year | 2024 |
| Category | Government Aid |
| Objective | To promote sustainability and reduce financial burden on home renovation pricing. |
| Applicable persons | All residents of Canada |
| Age Limit | 18+ years |
| Average amount | $7500 |
| Official Website | canada.ca |
Who is Eligible for $7,500 Home Renovation Credit in 2024 ?
- Citizen of Canada.
- Regular taxpayer to CRA in previous financial years.
- Property should be in Canada and owned by qualifying eligible individual.
- Individual must be living in Canada from 1st January to 31st December during the period of claim. He can be qualifying individual or qualifying relation.
- One of the qualifying individuals or qualifying relations must be living in the property which is being renovated.
- A qualifying individual and a qualifying relation of the qualifying individual primarily reside, or intend to reside, within 12 months after the end of the renovation period.
- Qualifying individual who is senior or 65+ years of age or adult who is eligible for Disability Tax Credit (DTC).
- If businessperson, then contractor details with a business address and GST/HST registration number is required.
- Individual must have expected renovation costs of the dwelling property.
- Renovation should be completed in the tax year regardless of when the renovation started.
If the qualifying individual dies, then he is still eligible to be paid the amount in his own account or the qualifying relative’s account if he fulfils the following criteria:
- A resident of Canada at the time of death.
- A resident of Canada immediately before death, then it is applicable till end of year.
- The same age at year-end as if they were alive.
- Spouse or common law partner is alive and hasn’t yet moved on with another partner before the year-end.
All About $7,500 Home Renovation Credit terms
- Qualifying Renovation: It is the type of renovation which creates a secondary unit in the house which will be occupied by the qualifying individual or a qualifying relation in future. The value of the credit is 15% less than the qualifying expenditure and $50,000.
- Qualifying Individual: Individual who meets the criteria for tax credits and for whom the secondary unit is being created. You can be:
- 65 years of age or older before the end of the renovation period taxation year.
- 18 years of age or older before the end of the renovation period taxation year and eligible for the disability tax credit (ignoring attendant care restrictions).
- Qualifying Relation: Individual(s) who can be family members such as parents, grandparents, children, siblings, aunts, uncles, nieces, nephews, and cohabiting spouses or common-law partners of the qualifying individual.
- Eligible Dwelling: Housing unit located in Canada that is owned by the qualifying individual or a qualifying relation where both ordinarily reside or intend to reside within 12 months after the renovation period.
Steps to apply for $7,500 Home Renovation Credit
- Apply for the claim in the tax year when the renovation period concludes.
- Renovation period starts with the first qualifying expense and ends when the renovation is completed.
- If multiple individuals share costs, then the credit can be split, meeting specific conditions.
- One can claim more than one qualifying renovation in the same year.
- Keep the following supporting documents handy:
- detail goods/services purchased.
- Business address proof.
- vendor details.
- purchase dates.
- delivery proof.
- work descriptions.
- adresses
- invoice amounts.
- proof of payment.
How to claim for $7,500 Home Renovation Credit ?
To claim:
- It can be claimed on line 45355 of income tax and benefit return using Schedule 12.
- Use Schedule 12to report expenses related to the MHRTC and calculate the total credit one can claim.
- The same expense cannot be claimed for multiple tax credits.
Non-Qualifying Expenses:
- Routine repair or maintenance.
- Household appliances or electronic home-entertainment devices.
- Housekeeping, security monitoring, outdoor maintenance, or similar services.
- Financing costs for the renovation.
- Goods or services provided by a relative unless they are registered for GST/HST.
- Expenses claimed under another tax credit such as Medical Expenses Tax Credit (METC) or Home Accessibility Tax Credit (HATC).
- Expenditures not supported by official receipts.
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