Canadian Finance Blog » HRTC

Two Weeks Left For The Home Renovation Tax Credit (HRTC)

Tom Drake — Mon, 18 Jan 2010 10:00:55 +0000

Were you thinking of doing some home renovations sometime this year but haven’t decided when to do them? There are two weeks remaining to qualify for the Home Renovation Tax Credit. While this may not be enough time to get a contractor in to finish a job before January 31st, it is still a great opportunity for do-it-yourself renovations.

The Home Renovation Tax Credit provides a 15% tax credit on home renovation expenses over $1,000 and up to $10,000. This maximum of $9,000 equals a tax credit of $1,350. The HRTC is a one time tax credit that was introduced to help encourage spending our way out of the recession. Unfortunately, there has been no mention of continuing this program in the future.

Depending on your comfort level with these projects, simple do-it-yourself renovations could include:

painting
tiling walls or floors
upgrading bathroom or kitchen faucets
building a deck
insulating a basement or garage
laying sod
upgrading light fixtures

Maybe you’re saving up for your renovations later in the year? While normally I wouldn’t recommend taking on debt, I did calculate that if you borrowed for your renovations, the tax credit would not only pay the interest but could put you ahead if paid off soon enough.

Another benefit of getting your renovations done before January 31st is that many retailers like Rona and Home Depot are providing further incentives to renovate if you use their store to get it done.

So if you’re looking to renovate this year, you might want to consider paying for all your materials this month and claiming a credit up to $1,350. After that, you could even store them in your garage and wait until the summer!

Image by skidrd

Rona and Home Depot Provide Further Incentive to Renovate

Tom Drake — Thu, 07 May 2009 11:00:56 +0000

The federal government introduced the Home Renovation Tax Credit as an incentive to Canadians to start renovation projects as a means of providing economic stimulus. Spending the maximum of $10,000 on materials and labour would make you eligible for the full tax credit of $1,350.

Rona has recently started a program called RONAdvantage. With this plan, you must sign up for the Rona Desjardins Visa. You can then track all your purchases until January 31, 2010 and submit a claim form for 10% in Rona gift cards on eligible purchases up to $10,000.

Home Depot is starting a similar program in July called Redemption Tracker. You would need to apply for a Home Depot Consumer Credit Card to track your purchases. Their website says that the The Home Depot Tax Credit Top-Up allows you to earn up to 10% back in Home Depot gift cards on eligible purchases during promotional periods. So this might not be as open as the RONAdvantage plan that’s available over the entire HRTC period.

Comparing the two, it looks like Rona has the superior promotion, its tracking is available now and does not have the “promotional periods” catch. If you were to spend $10,000 on eligible purchases, you would receive $1,000 in Rona gift cards and then receive a tax credit from the CRA for $1,350. Depending on the type of renovations, you may also be eligible for ecoENERGY Retrofit grants.

Borrowing for the Home Renovation Tax Credit (HRTC)

Tom Drake — Tue, 10 Feb 2009 12:00:16 +0000

Most people are saying that they wouldn’t borrow money for renovations to make the February 1, 2010 deadline for the Home Renovation Tax Credit (HRTC). The more I look at it, the more it might make sense if you can afford the extra monthly payment and can pay it off within about 6 years.

The HRTC is a 15% credit on money spent for renovations over $1,000 and no more than $10,000. So basically, if you spend $10,000 you get a credit on $9,000, a credit worth $1,350.

Now if you were to borrow $10,000 at 4% for, let’s say a more common 5 years, you would pay $184 a month and it would only cost you $1,050 in interest. Not only could you do your renovation sooner, you’d still come out ahead by $300!

It can get even better. Lets say you borrowed money and did your renovations this summer, got your tax refund nine months later, and put it towards the loan. You would then pay your loan off 8 months earlier and your total interest would only be $820! So now you would be able to do your renovation this summer, instead of putting it off, and after the interest paid, you’d still have $530 of the government’s money towards it!