The Home Renovation Tax Credit and Condominiums
The 2009 Tax forms are out and instructions on claiming the credit for the new Home Renovation Tax Credit can be found on page 38 of the 2009 General Income Tax and Benefit Guide. To begin, you list your expenses on Schedule 12. For condominium owners, this may include amounts spent by the Corporation, in addition to your personal expenditures.
One of the qualifying conditions for condominium owners is if “the condominium has notified you in writing of your share of the expenses”. This places the onus on the Corporation to calculate and report to the owners their share of eligible expenses.
My recommendation to my condominium boards is to calculate the eligible expenses, copy all the necessary invoices, then to advise each homeowner of their shared based on the same proportionate percentages used to calculate their common element fees, and include copies of the invoices.
There has been some pondering over how to distribute the eligible expenses for those condominium units that have changed ownership during the year. In my opinion, this can be accomplished by the following method:
The eligible period for expenses is after January 27, 2009 and before February 1, 2010, this is a total of 369 days. If you divide the total expenses by the number of eligible days, then multiply that number by the days an owner was in possession of the unit, that should be the amount they are eligible to claim. For example, for a condominium spent $9,000 on repairs and an owner whose proportionate share is 3.687% of the total expenses purchased and closed their unit on November 1, 2009, the calculation could be as follows:
$9,000 x 3.687% = $331.83 / 369 = $0.90 x 92 = $82.73 (92 being the number of days from November 1, 2009 to January 31, 2010). This owner would be eligible to claim $82.73 towards the Home Renovation Tax Credit.
In the absence of clear direction from the Canada Revenue Agency on how to deal with the issue of unit sales, his solution is clear and, in my opinion, is the most fair way of distributing the credit.
About the Author
Tracey McLellan has over 25 years experience in the Condominium management industry. She also teaches financial management and budgeting to prospective property managers and board members at a local college, in addition to sitting as a volunteer on a local community board of directors. Visit our website at http://www.traway.com to discover additional tools to assist you in managing your community!
Home Renovation Tax Credit FAQ:
Question: Canada’s Home Renovation Tax Credit Question?
Who should claim? The higher earner in a home, the lower earner, or split it in some way?
Answer: It doesn’t change the amount of the credit if it is claimed by the lower or higher income person. It is a straight 15% of the amount spent over 1,000 up to 10,000.
It does need to be claimed by someone who has tax payable. Since it is a non-refundable credit it won’t reduce tax payable below zero.
Question: Home renovation tax credit?
After spending the $1000 minimum for the HRTC, is the tax credit applicable back to dollar 1 or just on the amount spent after the initial $1000?
Answer: After the $1000 deductible.
Question: Home Renovation Tax Credit?
Who can take advantage of new HRTC? What is the deadline? If I live in a condo am I still eligible?
Answer: The home renovation tax credit in the Jan. 27 budget applies to condominiums and even to eligible work undertaken by condo corporations. In a typical condo arrangement, each condo-unit owner pays a monthly maintenance fee, which typically goes into the condo corporation’s general or reserve fund, from which the condo corporation would pay contractors’ renovation bills on behalf of the unit owners.
However, the credit is only available to individuals, not corporations, so, the condo corporation is not entitled to the credit. Instead, the draft legislation provides that a condo owner can claim the credit for qualifying renovations made on his or her own unit, as well as for his or her share of renovations of the common areas made by the condo corporation.
Check the CRA website for the documentation requirements to support claims for renovations made to the common areas of a condo building.
Question: Is a new detached garage included in the Canadian HRTC?
I built a garage this summer that set me back $11,600 total cost due to the fact that I done all the labour. Can I claim my detached garage with the Canadian Home Renovation Tax Credit?
Answer: This is a good question since a detached garage is not a permanent fixture to the dwelling. Check with CRA to be sure but in the mean time hold on to your receipts. Also, your accountant should have an answer for you when you file your income tax.