Home Renovation Tax Credits in Canada

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Home renovation tax credits allow you to deduct a portion of your renovation expenses from the taxes you owe. They are a great way to reduce the cost of your renovations. However, you must meet specific eligibility requirements to receive the credit. In Canada, one can apply for federal tax credits that are applicable Canada-wide, as well as tax credits specific to their province. Provincial home renovation tax credits are currently available in Ontario, British Columbia, Quebec, Manitoba and New Brunswick.

The Multigenerational Home Renovation Tax Credit first appeared in the 2022 budget and is available for tax returns of 2023 and onwards. The credit is available for renovations made to homes in order to include a secondary suite for senior or disabled family members. The maximum credit amount is $7,500, which is a 15% refund on up to $50,000 in expenses. Any additional expenses won’t increase your credit.

To receive the rebate, you must meet the following criteria:

• The renovations must be completed in your primary residence.
• You must have a qualifying relationship with a senior (over 65) or disabled individual.
• The expenses must meet the qualifying expenditure requirements.

If the cost of the renovation is shared by multiple individuals, the credit may be split between them.

Senior residents or those with disabilities can claim tax credits on expenses that increase the accessibility of their primary residence. This credit is available for many costs, including wheelchair ramps, grab bars, and widened doorways. Since 2022, the maximum expense eligible for tax credit is $20,000, which gives a tax credit of up to $3,000. Till 2021, the maximum credit amount was $1,500.

Eligible expenses include the cost of materials, fixtures, equipment rentals, permits, etc., along with service fees charged by professional workers.

The GST/HST new housing rebate program also offers a rebate on substantial renovations for your primary residence. For a renovation to qualify as "substantial," it must exceed 90% of your home. There are numerous conditions for the rebate, such as:

• Only living spaces are considered; renovations to your garage or crawlspace do not qualify.
• A basement remodelling on its own would not be regarded as a significant makeover.
• The fair market value of your home after renovating can't exceed $450,000.

The maximum rebate amount is:

• $6,300, when you paid 5% GST, or HST at 12%, 13%, 14% (of which 5% was federal part of the HST) or 15% (of which 5% was federal part of the HST)
• $7,560, when you paid 6% GST, or 14% HST (of which 6% was federal part of the HST)
• $8,750, when you paid 7% GST, or 15% HST (of which 7% was federal part of the HST)

Ontario homeowners who made a substantial renovation on their principal residence are eligible to receive a rebate on the provincial part of the HST paid. If you had paid HST on the purchase of the land, you can get a maximum rebate of up to $24,000, while you can get up to $16,080 rebate if you didn’t pay HST while acquiring the land. The rebate amounts to 75% of provincial HST paid for eligible construction costs and materials.

Additionally, the property's fair market value can't exceed $450,000 after the renovations have been completed. You must also apply for this rebate within two tax years of completing the renovations. As with all substantial renovations, over 90% of the house must be renovated to qualify for the rebate.

British Columbia offers a home renovation tax credit for seniors and persons with disabilities for renovations made to improve the accessibility or functionality of the home. The credit is worth up to $1,000 per year and can be claimed for the cost of eligible home modifications, such as widening doors, installing handrails, etc. The credit allows you to deduct 10% of your qualifying expenses from BC income taxes and can be claimed while filing the T1 income tax return.

To be eligible, you must be 65 years or older or have a disability that prevents you from completing essential daily activities on your own. However, those living with a senior or someone with a disability can claim the deduction on their tax return.

The Residential Access Modification Program is a grant available to low-income Albertans with mobility challenges. The grant can be used to make permanent modifications to the home that can improve access to and movement within the principal residence. The maximum annual grant amount is $7,500, and the maximum grant amount for a 10-year period is $15,000.

As the name suggests, the credit applies to those who build or renovate a residential wastewater system at their primary residence or cottage. An example of a residential wastewater system is a septic tank. The tax credit program is available only from 2017 to 2027. Thus, to be eligible for the credit, homeowners must enter into a contract with a qualified contractor before April 1, 2027. Quebec homeowners can get a maximum credit of $5,500 per home, which can be claimed while filing their Quebec income taxes .

The credit provides a 20% refund on expenses over $2,500. For example, if you spent $10,000 on installing a septic tank. You would receive a 20% deduction on $7,500 (10,000-2,500). This would amount to a $1,500 tax credit.

Quebec residents can receive a rebate on the GST & QST paid to complete a substantial renovation. A substantial renovation means over 90% of the building must be renovated. You can receive a maximum rebate of 36% of GST paid and up to 50% of QST paid. This translates to a maximum rebate of $6,300 and $9,975 on GST and QST, respectively.

It is noteworthy that the rebate starts to reduce as your property's fair market value after renovations exceeds $350,000 for the GST rebate and $200,000 for the QST rebate. There is no rebate after the fair market value exceeds $450,000 for GST and $300,000 for QST.

As the name suggests, this tax credit applies to Manitoba homeowners for installing energy-efficient equipment. Depending on the equipment installed, there are various refund rates to be deducted from Manitoba income taxes:

• Geothermal heat pump systems: Receive a 7.5% refund on geothermal pumps manufactured in Manitoba. If the installer is certified by the Manitoba Geothermal Energy Alliance, Inc., you will receive an additional 15% refund on the remainder of the costs.
• Solar thermal energy systems: A 10% refund on the cost of purchasing and installing specific solar heating equipment in the province. The system must be new and can include solar collectors, energy conversion, and energy storage equipment.
• Biomass fuel energy equipment: A 15% credit rate applies to biomass fuel energy equipment installed and used in a business.

Qualifying NB residents can receive up to a $1,000 credit from New Brunswick income taxes for renovations intended to provide mobility or decrease the risk for seniors. The refund rate for NB Seniors' Home Renovation Tax Credit is 10%, meaning you can spend a maximum of $10,000 to receive a $1,000 credit. However, any government assistance (excluding tax credits) must be deducted from the $10,000 to calculate the new limit. Additionally, those living with seniors 65 or older in a primary residence can receive the credit.

Seniors could receive a tax credit of up to $2,500 to deduct from their Ontario income taxes in the years 2021 and 2022. The credit is for home safety improvements that help prevent accidents and injuries, such as installing grab bars and rails in the bathroom, fixing loose stair treads, and adding smoke alarms. The credit rate is 25% of qualifying expenses for a maximum of $10,000 in spending.

Eligible applicants must have been 65 years or older by the end of the tax year of the year in which renovations were completed. Additionally, the home must have been their primary residence at the time of the renovation. However, this requirement is waived for taxpayers who are in a qualifying relationship with a senior and reside with them.

This credit was available to Quebec homeowners on two separate occasions: the 2013-2014 and the 2016-2019 tax years. The tax credit refunded 20% on eligible expenses above $2,500, for a maximum credit of $10,000.

Eligible expenses must have a positive environmental impact or improve the energy efficiency of a principal residence or cottage.

During the 2021 and 2022 tax seasons, Saskatchewan homeowners could get up to $2,100 in credits on their Saskatchewan income tax returns for renovating their primary residence. The home renovation tax credit amounted to 10.5% of the costs incurred.

Eligible expenses include labour and professional services, building materials, fixtures, equipment rentals, and permits. Additionally, the $2,100 is split between the two years, meaning a maximum of $1,155 for 2021 and $945 for 2022. The tax credit has been eliminated since the tax year 2023.

This tax credit allowed homeowners in Newfoundland and Labrador to deduct the cost of renovation projects from their Newfoundland & Labrador income taxes. Eligible homeowners could receive a rebate of up to $10,000 for changes made to their primary residence. The refund rate is 25% for expenses up to $40,000. Homeowners must have also signed a pre-approval form before starting the project.