Over 65 and want to stay in your home longer? Well the BC Government wants you to stay in your home too. In April 2012 the Seniors’ Home Renovation Tax Credit was introduced for BC residents, unfortunately with little fanfare. This is a refundable tax credit available to seniors, or to those who have a senior living in their home, to make the home more elderly friendly.
The credit is worth up to $1,000 annually, based on 10 per cent of actual renovation costs. In other words, to max out the credit there has to be $10,000 of eligible expenses incurred in a calendar year. It is a refundable tax credit which means the taxpayer claiming the credit will receive the full amount claimed regardless of whether or not BC provincial income taxes are due.
For example, if the renovations cost $6,500 yielding a credit of $650, and the taxpayer has $125 of BC provincial tax liability than the taxpayer not only has the $125 of provincial tax eliminated but also receives the balance of $525 as a refund.
This differs from a non-refundable tax credit where once the tax liability is reduced to zero, the difference is forfeited – no refund of the balance to the taxpayer.
The renos can be to a home whether rented or owned and includes improvements to the land surrounding the home.
To be an eligible undertaking all renovations must be of an enduring nature and enable a senior to gain access to or mobility within or around the home or property. Examples are as basic as installing hand rails, door levers or motion lights and as complex as widening doorways, lowering counters or building elevators. Also included are module fixtures like ramps and tubs.
However, the improvement must be seen as being typical to the needs of the senior it is intended to aid. It cannot be something that simply increases the value of the home or property such as replacing the shingles on the roof or creating a backyard garden.
Renovations can be done by the do-it-yourself taxpayer but no cost can be attributed for the taxpayer’s labour. Family members can be hired to do the renovation work as long as the business is registered with HST.
The claim can be made by the senior or, in the case of the senior living in a family member’s home, the family member whose home experiences the renovation can make the claim, or both parties can make a shared claim but to a maximum of $1,000 between the two taxpayers. It remains a refundable tax credit regardless of the party who makes the claim.
This credit was introduced in April 2012 and therefore only expenses after that date can be claimed for 2012 tax purposes. No documentation needs to be submitted to CRA at the time of filing, but remember to keep all your records in case CRA asks to review them.
Please take note, at this time this credit remains available for 2013 and likely beyond.