Are Home Renovations Tax Deductible in Canada?

Tax season is just around the corner in Canada, and several homeowners are reviewing their expenses from 2022. If you've done your research, then you know that there are several ways that you can use your annual expenses to your advantage during tax season. One of the most common ways is by making use of tax credits and incentives.

Tax credits allow Canadians to deduct a portion of their annual expenses from their income taxes; however, these credits generally come with strict qualifications. If you renovated your home in 2022, then you most likely want to learn about home renovation tax credits in Canada.

Several provinces offer unique tax credits that Canadians can take advantage of if they've made qualifying modifications to their homes.

So, if you've been wondering, "are home renovations tax deductible in Canada?", you can learn the answer below!

After learning how to deduct home renovation-related expenses from your income taxes, you can check out our previous blog post to learn if property taxes and home insurance are tax deductible.

Are home improvements tax deductible in Canada? — An detailed guide for Canadian homeowners

In some cases, yes, you can deduct a portion of your home renovation-related expenses from your income tax. However, in order to do so, you need to qualify for a home renovation tax credit.

A home renovation tax credit is a financial incentive (offered by provincial and federal government groups) that allows homeowners to write off a pre-set amount (this amount is generally capped at a certain percentage) of their home renovation-related expenses.

There are a variety of different home renovation tax credits in Canada, all of which come with their own sets of benefits and requirements (we'll touch on these shortly). 

Taking the time to familiarize yourself with these credits (and their requirements) can help you get some of your hard-earned money back this upcoming tax season.

In which provinces can you claim renovations on your taxes in Canada?

The federal government offers a handful of home renovation tax credits, like the Home Accessibility Tax Credit, to homeowners across the country. However, homeowners should note that the following provinces and territories do not provide individual home renovation tax credits or incentives:

• Alberta
• Prince Edward Island
• Yukon
• Northwest Territories
• Nunavut

How can you claim home renovations on your taxes in Canada?

As mentioned above, you may be able to write off a percentage of your home-renovation related expenses if you qualify for a federal or provincial home renovation tax credit.

Here's a quick rundown of the home renovation tax credits in Canada (by province):

*Please note that home renovation tax credits are prone to change with little to no notice. A tax credit that was available during the previous tax season may be deemed "inactive" this year. Contact a chartered professional accountant (CPA) for more information.*

Home renovation tax credit in Saskatchewan

Saskatchewan offers a home renovation tax credit that allows homeowners to deduct as much as $2,100 (10.5% of the incurred costs) of renovation expenses incurred from modifications to their primary residence from their income taxes. 

The tax credit covers expenses related to materials, equipment rental fees, permits, fixtures, labour, etc.

Home renovation tax credit in British Columbia

British Columbia offers a unique home renovation tax credit referred to as the Home Renovation Tax Credit for Seniors and Persons with Disabilities. This credit amounts to $1,000 (annually) and allows qualifying homeowners to claim up to 10% of their (eligible) home modification expenses from their income taxes.

To qualify for the Home Renovation Tax Credit for Seniors and Persons with Disabilities, you need to live with a disability that makes it difficult for you to complete regular household tasks by yourself or be 65 years old (or older). You can also qualify for the credit if you live with a person who meets the criteria listed above.

Home renovation tax credits in Ontario

Ontario offers a number of home renovation tax credits, including the Ontario Seniors' Home Safety Tax Credit and the Ontario New Housing Rebate for Substantial Renovations.

The Ontario Seniors' Home Safety Tax Credit gives Ontarians the opportunity to deduct $2,500 of qualifying expenses from their income taxes. Examples of these expenses include updating smoke alarms, installing grab bars in bathrooms and repairing stair treads. 

Ontarians need to be a minimum of 65 years old and need to have made the changes to their primary residence. However, you can qualify for the credit if you live with someone who meets the criteria listed above. 

The Ontario New Housing Rebate for Substantial Renovations allows qualifying homeowners to receive an HST rebate of up to $24,000 if they make a "substantial" change to their home. A "substantial" change is a renovation that modifies/replaces more than 90% of the residence. 

In order to take advantage of the rebate, you need to apply for the credit within two years of the modifications, and the fair market value of the property cannot exceed $450,000 (post-renovation).

Home renovation tax credits in Quebec

Quebec offers a handful of active home renovation tax credits, including the Tax Credit For Upgrading Residential Wastewater Treatment Systems and the GST/QST Rebate for Substantially Renovated Housing.

The former allows homeowners to deduct as much as $5,500 from their income taxes if they modify a wastewater system located at their primary residence or vacation home (cottage).

The latter is similar to The Ontario New Housing Rebate for Substantial Renovations but only allows homeowners to receive a maximum rebate of $9,975.

These are some of the most notable home renovation tax credits in Canada. If you'd like to learn more about the tax credits listed in the provinces listed above (or one of the provinces we didn't have time to mention!), you can speak with your chartered professional accountant.

Save up to 25% on your insurance premium when you bundle with Surex

Now that you've learned how to leverage your spending this tax season, you should take a moment to learn how you can save on insurance.

The easiest way to reduce your insurance rate is by comparing quotes with an online insurance brokerage like Surex. Our team at Surex can help you find and compare the best home insurance quotes in ten minutes or less.

If you need to invest in multiple insurance policies (home and auto, for instance), be sure to ask your advisor about the benefits of bundling! Bundling your policies with a Surex insurance provider can help you save up to 25% on your insurance expenses!