| Income tax & accounting are serious work, but we aren’t your average accountants. Do you know how copper wire was invented? What is the multi-generational home renovation tax credit? The Canada Revenue Agency (CRA) has announced a new tax credit for multi-generational home renovations. This means that if you live with your parents, grandparents, adult children, grandchildren, and other defined relatives, you can claim up to $50,000 for eligible expenses to make your home more accessible, comfortable, and safe for everyone when you are renovating or adding a secondary dwelling unit. Some examples of eligible expenses are installing ramps, widening doors, adding grab bars, or upgrading the plumbing. The tax credit is refundable, which will reduce any tax you owe and may result in a refund. The CRA says that this tax credit will help families stay together and support each other, while also stimulating the economy and creating jobs in the renovation sector. Sounds like a win-win situation, right? Well, not exactly. There are some drawbacks and limitations to this tax credit that you should be aware of before you start tearing down walls and buying new faucets. Some of the drawbacks and limitations of the CRA multi-generational home renovation tax credit are: The credit is based on 15% of the eligible expenses, up to a maximum of $ 50,000 per year. This means that the maximum amount of the credit you can claim is $7,500 per year, regardless of how much you spend on the renovations. The credit is only available for renovations that improve the safety, accessibility, or functionality of your home for an adult with a disability or senior relative(s). You cannot claim the credit for cosmetic or aesthetic improvements, such as housekeeping, financing costs, painting, landscaping, or installing new appliances. The credit is only available for renovation work begun by a qualified contractor after January 1, 2023. Your claim for any work that you do yourself or that is done by a family member or friend who is not a qualified contractor is limited to the costs of materials, building plans and permits. The credit is only available for renovations that are done to your principal residence. You cannot claim the credit for renovations that are done to a secondary residence, such as a cottage or a rental property. The property must be a fully self-contained unit. The credit is subject to audit by the CRA. You must keep all receipts and invoices related to the renovations and provide them to the CRA if requested. You may also have to provide proof that the renovations were done for an adult with a disability or senior relative(s) who live with you or who will live with you within 1 year after the renovations are completed. Unlike with the Medical Expense, Accessible Housing or Disability Tax Credits, double dipping is not allowed. Any expenses claimed under this program are ineligible for any other tax credit. Are you ready for this? Two government departments fighting over a penny For more information on the multi-generational home renovation tax credit, visit https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/multigenerational-home-renovation.html  October 31, 2023 : For those of you required to file the UHT return, don’t be late! |
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