As of Feb. 17, 2016, British Columbia has expanded the home renovation tax credit for seniors, and individuals with disabilities may also claim the credit. This refundable tax credit offsets the cost of permanent renovations to make homes more accessible or to allow residents to be more functional in their homes.
Who Can Claim B.C.’s Home Renovation Tax Credit?
To claim this credit, you must be a resident of British Columbia. Additionally, you must be over the age of 65 or be making renovations for an elder relative who lives with you. For example, if you are only 45 but your mother is 67, you can qualify for this credit if she lives with you and you renovate your home for her. Alternatively, as indicated above, you may also claim this credit if you are disabled. Unfortunately, if you live with a disabled person and make renovations on his or her behalf, you do not qualify for this credit.
To be considered disabled for the purposes of this credit, you must be able to claim the disability tax credit. The DTC is a federal tax credit for individuals with severe and prolonged impairments. To apply for the DTC, you must complete Form T2201, which contains a section for a medical professional to describe your condition.
In some cases, you may be able to claim the home renovation credit even if you cannot claim the DTC. Namely, if you cannot claim the DTC because you pay for care in a nursing home or have an attendant, you are allowed to claim the home renovation tax credit if you have qualifying expenses.
Which Expenses Qualify for the Home Renovation Tax Credit?
Generally, to qualify, renovations must improve access or reduce the risk of injury in your home such as adding walk-in bathtubs, lowering kitchen countertops to accommodate someone in a wheelchair, or attaching ramps to your entryways.
In this vein, costs related to new roofs, new floor installations, plumbing repairs, and general home maintenance do not qualify for this credit. Some expenses such as new fire extinguishers, home care services, and vehicles for people with disabilities also do not qualify. These expenses can be related to the care of a senior or a disabled person, but unfortunately, they do not meet the criteria of this credit.
To ensure you only claim eligible expenses, you may want to closely review the list of eligible expenses on British Columbia’s website, talk with a tax professional, or use quality tax preparation software.
You may hire relatives to do the renovation work for you, but they must issue you a receipt with a GST/HST number. If you hire a relative who is not a GST/HST registrant, you cannot include those expenses when claiming this credit.
You must incur the expenses in the tax year for which you are filing, and British Columbia requires taxpayers to use the date the expenses were incurred rather than the date they were paid. For example, if you receive a bill for a walk-in bathtub on Nov. 15, 2016, you should claim that expense on your 2016 tax return, even if you do not pay the bill until 2017.
How Much Is the Home Renovation Tax Credit?
British Columbia’s home renovation tax credit is worth 10% of eligible expenses, but you may only claim a maximum credit of $1,000. For instance, if you spend $6,000 in qualifying expenses, you receive a tax credit of $600, or $6,000 x 0.10. Similarly, if you spend $10,000, your tax credit is $1,000. However, if you spend $20,000, your credit is still only $1,000 because that is the maximum credit you may claim per year.
This is a refundable tax credit, which means it can put money in your pocket. For example, if you only owe $600 in provincial income tax but have a $1,000 home renovation tax credit, you receive a $400 tax refund.
How Do You Claim the Home Renovation Tax Credit?
To claim the credit, fill out Schedule BC(S12). This is a simple form that allows you to list all of your expenses. The form asks for the date on the sales slip, the name of the contractor, the contractor’s GST/HST number, a description of the work, and the amount. Then, it prompts you to add up all the expenses, and transfer the cost of eligible renovations to box 6048 of Form BC479, British Columbia Credits. Whether you are filing electronically or through the mail, you should not send receipts or sales orders with your tax return. Instead, keep those items for your records for at least six years.