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The Home Renovation Tax Credit and Common Element Renovations

Time Posted on December 15, 2009 at 12:14 PM User John Moher Comment No comments

As part of the Government of Canada's economic action plan, Canadians living in condominiums will be able to claim a home renovation tax credit ("HRTC") for a portion of the costs associated with common element renovations.  By way of background, the program provides a 15% non-refundable income tax credit on eligible expenditures for eligible dwellings.  An expenditure is eligible if it is incurred in relation to a renovation or alteration of an "eligible dwelling". An "eligible dwelling" must be occupied as a principal residence by the owner, or a family member of the owner, between January 27, 2009 and February 1, 2010.  Further, the work performed or goods acquired must be performed or acquired, as the case may be, after January 27, 2009, but before February 1, 2010. 

 The credit applies to expenditures in excess of $1,000.00, but not more than $10,000.00.  Accordingly, the maximum credit available is $1,350.00 (9,000.00 x 15%).
 
With respect to common element renovations, the cost of all qualifying common element renovations is multiplied by a unit owner's percentage interest in the common elements.  This product, to a maximum of $9,000.00, is then multiplied by 15% to ascertain the credit a unit owner is entitled to claim.
 
On the administrative side, boards and property managers will soon have to create a detailed list outlining the costs incurred by the condominium corporation in relation to all qualifying common element renovations.  Further, all required supporting documentation, as outlined on the Canada Revenue Agency's website, must be retained by the condominium corporation.  This list and supporting documentation, together with schedule "D" to the condominium corporation's declaration, should be delivered to unit owners in February or March of 2010.  The key is to provide unit owners with the required information after February 1, 2010, so all qualifying expenditures are included, but well in advance of the April 30, 2010 income tax filing deadline. 
 
In early February, boards should consider consulting an auditor to review the list of costs and supporting documentation to ensure compliance with the requirements of the HRTC program.  In cases where it is not clear whether a particular renovation qualifies for HRTC, boards may wish to consult legal counsel for an opinion.

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