Home Renovations Could Bring Home Big Savings – ARCHIVED

In 2009, many people tried to save money, so maybe it wasn’t the best year to buy a new home. But if you saved some cash by renovating your existing home instead of purchasing a new one, you might find more savings coming your way soon.

The Canada Revenue Agency (CRA) is offering a Home Renovation Tax Credit which lets homeowners save up to $1,350 on home renovation costs between January 27, 2009 and February 1, 2010.  Even if homeowners haven’t made renovations yet, acting fast can rack up credit that can be claimed in 2009 personal tax (T1) returns.

The 15% Home Renovation Tax Credit can be claimed on home renovation costs of $1,000 or higher – up to but not exceeding $10,000. TurboTax can help Canadians make sure they get every penny of tax refunds they earned.

Everything from adding new carpeting or hardwood floors to changing home ventilation systems might translate into tax breaks and for the skilled homeowners who took on do-it-yourself projects, all building materials, fixtures, equipment rentals and permits are eligible expenses.

But taxpayers beware: The credit doesn’t apply to every home update. While adding a swimming pool or resurfacing that driveway might merit tax refunds, other things like cleaning costs, purchase of tools, and the cost of furniture or home entertainment devices are ineligible expenses.  Additionally, any renovations performed by a relative of the homeowner will not count toward tax refunds.

For a list of eligible expenses, visit the Canada Revenue Agency web site: http://www.cra-arc.gc.ca/hrtc/

Still, the savings can really add up. For example, say you purchased an energy-efficient furnace in your home at a cost of $4,500, replaced your front lawn with sod at a cost of $1,500, painted your home interiors for $2,000, and underwent bathroom renovations for $4,500 – totaling $12,500 in renovations. You can claim expenses of $9,000 on your 2009 tax return, resulting in a credit of $1,350. But hurry, the deadline for renovations that can be applied to your 2009 tax return is Sunday, January 31, 2010.