Home renovation is doing repairs to maintain your home’s good shape or if you want to increase your home’s value because you’re planning to sell it. It’s up to you, and whatever your reason is, you must have the proper knowledge before deciding on your home renovation. And let me give a little knowledge about tax credit.
The rules governing taxes change regularly; even when updated, they are difficult to understand. This article will help you understand the home renovation tax credit Ontario and tax credits in general even better.
Federal home renovation tax credit
- home renovation tax credit allows you to deduct a portion of your expenses from your taxes.
There are two major tax credits for home renovations; the Home accessibility tax credit and the Multigenerational home renovation tax credit.
Home Accessibility Tax Credit
It helps ease the burden of making Canadian Homes more accessible for people with disability and the elderly (aged 65 years and above). That said, people with disability and the elderly qualify for this tax credit.
A person who conducts renovation on behalf of the latter can also claim this credit. Still, they must also be a close family relative who has asserted that person as a dependant for tax purposes.
You can claim up to 15% of $10,000 of eligible expenses, but thanks to the new federal budget, the limit is increased to $20,000 for a total possible credit of $3,000.
Multigenerational Home Renovation Tax Credit
It’s a new tax credit introduced this year that aims for multigenerational housing.
Multigenerational homes have three or more generations living under the same roof.
The primary use for this new tax credit is to create a new suite on an existing property, which is the most expensive renovation one can undergo.
The tax credit can allow a 15% credit on up to $50,000 of eligible renovation expenses and is a non-refundable tax credit.
Because this tax credit is new in the market, the criteria may change between now and next year, 2023. It is advisable to wait until the 2023 tax year for renovation when the credit should be in place.
Admit it or not, home renovation is a luxury. If you have money or you are qualified for a home renovation grants Ontario, then you can proceed with the renovation. However, not all of us are privileged to get renovations done.
You should take advantage of these tax credits if you are qualified. These tax credits will put money back in your pocket; before you know it, you’ve already saved money.
But what are the common reasons why an individual undergoes a renovation?
- Improve the functionality of your home. For instance, your basement has been stored for how many years, and you want to remodel it into a movie theatre or a playroom. That will, of course, depend on you, but the main reason here is to improve the functionality of your home.
- Increase your home value. If you want to sell your home at a higher cost, home renovation is one way you can do that. Fix the wall paint, change the door locks to a better quality, or change the counter top. You can do home repairs to increase the home’s value. Check for any repairs that you need before you undergo a home renovation for you to be able to estimate the cost.
- Lower energy costs. Change your light bulbs or any appliances that you think consume high energy and change them to energy-saving appliances. That way, you can lower your electricity bill every month.
- Change of style. There are a lot of trends going on on social media nowadays, and we all want to follow the trend. Especially if your home is old enough to be left out on the trend, you might want to change your home’s lifestyle.
- Fix safety issues. Your home should be your solace. So safety in your home should be a top priority. Fixing roof leaks, changing your door locks into better quality ones, or fixing wall cracks are an example of safety measures to ensure that you are safe in your home.
Getting all the work done can be exhausting and draining. However, you will only benefit in the long run, so you shouldn’t be discouraged from renovating your home. It can be expensive, but there are still ways to save money during a home renovation.
Home renovation, unfortunately, can be costly. And as the renovation proceeds, expenses get stacked above the estimated amount you’ll spend. But that is not a reason to stop yourself from home renovating because we should anticipate these kinds of circumstances if ever we want to do something that talks about money.
Home renovation credit Ontario is one way you can reduce expenses. A portion, half, or full deduction is still a deduction. We should take advantage of opportunities like this because we all want to save money, don’t we?