Tax credit of­fers reno in­cen­tive

Calgary Herald - Calgary Herald New Condos - - Recreation & Investment Properties - GER­ALD VAN­DER PYL

You’ve just bought a recre­ation prop­erty and the house could use some se­ri­ous up­dat­ing, or per­haps the fam­ily cabin that has been serv­ing you well for many years is start­ing to show its age.

Whether it is the for­mer or the lat­ter cir­cum­stance you find your­self in, it might be time for some ren­o­va­tions, and the tim­ing couldn’t be bet­ter, thanks to the Cana­dian Gov­ern­ment’s Home Ren­o­va­tion Tax Credit (HRTC).

Al­though it has re­ceived a lot of pub­lic­ity, many peo­ple don’t re­al­ize that the credit can also ap­ply to im­prove­ments you make to a va­ca­tion home, cabin or cot­tage.

Joanne Gor­salitz, com­mu­ni­ca­tions man­ager with the Cal­gary Tax Ser­vices Of­fice, says as long as your recre­ational prop­erty is re­served for per­sonal use and not rented out, than it is el­i­gi­ble un­der the pro­gram.

Gor­salitz says the 15 per cent non-re­fund­able tax credit is avail­able on ex­pen­di­tures of more than $1,000 and up to a max­i­mum of $10,000.

The max­i­mum is per fam­ily, not per prop­erty, so the $10,000 can be shared be­tween your pri­mary res­i­dence and va­ca­tion prop­erty if you chose. The max­i­mum avail­able tax credit would be $1,350, which is 15 per cent of $9,000, since the first $1,000 is not el­i­gi­ble.

To qual­ify for the HRTC, the im­prove­ments you make to your recre­ation prop­erty must have an en­dur­ing na­ture to them, says Gor­salitz.

Some ex­am­ples of el­i­gi­ble im­prove­ments, which can be found on Canada Rev­enue Agency’s web­site, in­clude ren­o­vat­ing a kitchen, bath­room or base­ment, new car­pet or hard­wood floors, sep­tic sys­tems, wells, adding deck or per­ma­nent hot tub or in­stalling so­lar pan­els.

Ex­am­ples of in­el­i­gi­ble ex­penses in­clude things, such as pur­chas­ing new fur­ni­ture or ap­pli­ances, clean­ing of car­pets, lawn care, or buy­ing new cur­tains and drapes.

The ex­penses re­lated to a project can in­clude ma­te­ri­als, per­mits, labour and pro­fes­sional ser­vices, fix­tures and rentals.

How­ever your own labour can­not be cal­cu­lated as an ex­pense.

She says the HRTC pro­gram cov­ers projects which be­gan, or were en­tered into con­tract for, af­ter Jan. 24, and that are com­pleted and paid for be­fore Feb. 1, 2010.

Peo­ple should keep all the re­ceipts for a project and then re­port the to­tal on their 2009 per­sonal tax re­turn.

A new line will be added to the T1 Gen­eral Tax Forms and the amount will ap­pear on Sched­ule 1 as a non-re­fund­able tax credit.

More in­for­ma­tion is avail­able at www.cra-arc. gc.ca, the Canada Rev­enue Agency’s web­site.

Just what ren­o­va­tion projects you should un­der­take at your recre­ation prop­erty can de­pend on a lot of things, but you should keep in mind some ba­sic ad­vice about ren­o­va­tions in gen­eral.

Bruce Hop­kins, gen­eral man­ager of the Re­mod­el­ers Group of Com­pa­nies in Cal­gary, says it’s al­ways a good idea to con­sider the value of a prop­erty and its lo­ca­tion be­fore de­cid­ing how much to spend on a ren­o­va­tion.

Hop­kins says it wouldn’t make sense to do $100,000 of im­prove­ments to a prop­erty in an area that is not highly sought af­ter. But if your recre­ation prop­erty was built long be­fore an area be­came pop­u­lar, it might lend it­self well to a more in­ten­sive ren­o­va­tion, to bring it up to the in­creased value of the neigh­bour­hood.

For many ren­o­va­tions, peo­ple de­cide to tar­get a few ar­eas of a home, which are in need of im­prove­ment.

Hop­kins says kitchens and bath­rooms are the two most pop­u­lar ar­eas to ren­o­vate, as they are of­ten a ma­jor con­sid­er­a­tion when peo­ple are looking to buy a home.

How­ever he says the re­turn on in­vest­ment for most ren­o­va­tions is con­sid­ered to be about three to five years, so if you are plan­ning to sell your prop­erty in the near fu­ture, you might want to care­fully con­sider which ren­o­va­tions to un­der­take.

And be­fore you go ahead with a project, it’s im­por­tant to make sure you are deal­ing with a rep­utable com­pany.

He says while many peo­ple ask for ref­er­ences, even bet­ter is if you can visit homes that the com­pany has ren­o­vated, see for your­self the work­man­ship, and even talk to the home­own­ers.

Pho­tos, Jupiter Im­ages

The re­turn in­vest­ment for most ren­o­va­tions is about three to five years, so con­sid­er­a­tion has to be given as to what you want to ren­o­vate.

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