Home owners are always griping about how their houses are money pits. So it’s nice to know that last year, especially, home ownership brought with it some tax perks, ones that will let some Canadians hang on to a few extra dollars.

“In 2009, there were a lot of provisions aimed at home owners,” says Robin Taub, a Toronto-based chartered accountant and financial coach. “First-time buyers were specifically targeted, so they should all have a close look at their income tax return.”

By comparison, the 2010 federal budget has very little in the way of tax relief for individual Canadians, she added, let alone home owners.

With the April 30 tax filing deadline approaching, Ms. Taub has these tax tips for home buyers and home owners:

1) Tax relief for buyers
First-time home buyers who bought their home after Jan. 27, 2009, may be eligible for the Home Buyers’ Tax Credit. The 15-per-cent tax credit is applied to expenditures of up to $5,000, which translates into tax savings of up to $750.

2) Put your RRSP to work
Under the Home Buyers’ Plan, first-time buyers may withdraw up to $25,000 from a registered retirement savings plan (RRSP) without paying any taxes on the amount withdrawn. The money can be used to buy or build a qualifying home for yourself, or a related person with a disability.

3) The reno subsidy
If you tackled some home renovation projects between Jan. 28, 2009, and Jan. 31, 2010, you may be eligible to claim the home renovation tax credit (HRTC). The tax credit is 15 per cent of qualifying expenses above $1,000 but less than $10,000, to a limit of $1,350.

4) Put your TFSA to work
The tax-free savings account (TFSA) that can be used for a down payment. Any adult Canadian can earn tax-free income in this registered account by contributing up to $5,000 each year. Earnings in the plan are not subject to tax, so your savings can accumulate and grow more quickly.

5) Home office deductions
If you either work from home or run a home-based business, you can deduct mortgage interest, property taxes and capital cost allowance. You can also deduct utilities, home insurance, and cleaning costs. But only the business portion of these expenses is deductible for tax purposes.

6) No tax on home sale
From a tax perspective, one of the best reasons to buy a house is that any capital gain realized from the sale of your “principal residence” is not taxable.

Check with Revenue Canada to ensure these details apply to you.

With the Jan. 31 deadline just around the corner, anyone who still wants to take advantage of the federal government’s popular home renovation tax credit had better hurry.

The Home Renovation Tax Credit is a non-refundable tax credit based on eligible expenses for improvements to your house, condo or cottage. It can be claimed on your 2009 income tax return.

“The most important thing for people to know is that they still have a week to buy and take delivery of materials that they are thinking of using for renovations,” Jamie Golombek, managing director of estate and tax planning with CIBC Private Wealth Management, said in an interview Wednesday.

Although it is likely too late to get the labour done in time, “anyone thinking of doing anything in their home in the next few months should try to get that material now… otherwise you are really losing out.”

The Home Renovation Tax Credit, introduced as a limited-time program in the 2009 federal budget, has proven extremely popular with housing-obsessed Canadians. “Anecdotally, it is the topic of almost every single presentation I give in terms of personal tax. The Canada Revenue Agency has responded to more technical interpretation questions in terms of what qualifies and what does not than any other topic in recent history,” Mr. Golombek added

“ Anecdotally, it is the topic of almost every single presentation I give in terms of personal tax. ”— CIBC’s Jamie Golombek said of the HRTC

The CRA estimates that as of last Friday, more than four million Canadians had enquired about the program. From Jan. 2 to 15 alone, 302,501 people visited the CRA website or phoned to ask about the HRTC.

Timing has played a role in the HRTC’s success, says Mr. Golombek, given that rates for home equity lines of credit are still historically low. “Even if people don’t have the actual cash to do the renos right now, they can borrow the money at very attractive interest rates and get a 15-per-cent non-refundable credit from the government.”

Here’s how the HRTC works:

Each family is allowed to claim on their 2009 income tax return a 15-per-cent non-refundable tax credit for eligible renovation expenses made to their dwelling. The credit allows tax payers to get up to $1,350 in tax relief for projects worth between $1,000 and $10,000. The $10,000 spending limit applies to homes, cottages or condos, provided the combined total does not exceed the $1,350 limit.

To qualify, all of the renos must take place after Jan. 27, 2009 and before Feb. 1, 2010. The supplies and materials must be bought and in your possession before Feb. 1st, 2010 to be eligible. Likewise, any work done by a contractor must be finished by the deadline, which means that signing a contract for the work ahead of the deadline is not sufficient.

To qualify for the HRTC, renos must be of “an enduring nature and integral to the dwelling.” So putting in a permanent swimming pool or hot tub, a new dock or septic system at the cottage, fixing a retaining wall or doing some landscaping all qualify. Cleaning your carpet, house or eavestrough would not qualify, nor does buying furniture, appliances or electronics.

Who’s using it?

Dan Wilson is one many Canadians taking advantage of the credit. He and his neighbour spent most of the fall rebuilding the front porch on their east-end Toronto semi. He also had a contractor fix a flat roof in his backyard, put in a new deck, installed two fireplaces and painted.

“I spent at least three times the limit for the tax credit,” said the 45-year-old Ontario government worker. “I think almost everyone on my street had something done to take advantage of it.”

Robert Katzer had a contractor redo both bathrooms in his Victoria condo, putting in marble sinks and faucets, along with a new bathtub with marble wall linings. Not done there, he upgraded most of the lighting in the unit, replaced the carpets, painted, caulked the windows and retiled the fireplace. “It wasn’t cheap but I love the end result,” he said.

Across Canada, the tax credit seems to have provided the push many Canadians needed to get those home reno projects going.

Mr. Wilson says he might have taken care of the renos in the next year or two, but the tax credit prompted him to do it now. “I love this credit. The prospect of getting $1,350 back is just so appealing. If it were continued next year, I would definitely consider re-doing my kitchen next year.”

How long will it last?

Contractors and home renovation retailers would also like to see the tax measure extended, arguing that it would continue to boost the economy and allow the recovery to fully take hold.

But Finance Minister Jim Flaherty said this week the measure was “not inexpensive” and the government’s plan is to let it expire at month’s end. He also ruled out any kind of extension back in December, when he said: “Well, that’s our plan to end it at the end of January, yes.”

RBC Dominion Securities Inc. chartered accountant and certified financial planner Suzanne Schultz says the credit, which was part of the conservative government’s stimulus plan, has been successful. “The point of this was to get the economy going and it seems to have done that. People are spending, retailers and contractors are saying they are busy.”

She says people who bought materials in order to qualify for the home renovation tax credit but ran out of time to get the work done before next week’s expiry date will likely keep contractors busy for the first part of 2010. After that, however, she expects to see a lull.

Ms. Schultz urged people to get out and make their purchases before the Jan. 31st deadline. “Make a list of what you need done and get shopping. This is not common, for the federal government to introduce short-term tax measurers like this.”

The Home Renovation Tax Credit is a non-refundable tax credit based on eligible expenses for improvements to your house, condo or cottage. It can be claimed on your 2009 income tax return.

It applies to work performed or goods acquired after January 27, 2009, and before February 1, 2010 under an agreement entered into after January 27, 2009. Therefore it is only available for the 2009 tax year.

Eligible expenses for goods acquired during this period, even if they are installed after January 2010, will still qualify. If an eligible expense involves work performed by a contractor or a third party, and the work is not completed by the end of the eligible period, only the portion that is completed before February 1, 2010 will qualify even if a payment has been made.

The HRTC applies to eligible expenses of more than $1,000, but not more than $10,000, resulting in a maximum non-refundable tax credit of $1,350 [($10,000 ? $1,000) × 15%].

Eligibility for the HRTC is family based. Eligible family members include you and your spouse or common-law partner, and your or your spouse’s or common-law partner’s children who are under 18 years of age at the end of 2009 (other than a child who, at any time during the eligible period – after January 27, 2009, and before February 1, 2010 – was married, was in a common-law relationship, or had a child).

The claim can be split among eligible family members but the total amount claimed cannot exceed the maximum allowable.

If two or more families share the ownership of an eligible dwelling, each family can claim its own credit (i.e., each up to $1,350) that is calculated on its respective eligible expenses.

Important things to remember

You do not have to submit your supporting documents with your income tax and benefit return; however, you must ensure this information is available should the Canada Revenue Agency request it.

To avoid problems with your HRTC claim, make sure you:

• get your contracts in writing (www.hiringacontractor.com); and
• keep your receipts.

Eligible expenses must be of an enduring nature and be integral to the eligible dwelling. The cost of routine repairs, maintenance, and expenditures not integral to the dwelling are not eligible.

Examples of eligible expenses

• Renovating a kitchen, bathroom, or basement
• New windows, doors, or flooring
• Building an addition, garage, deck, shed, or fence
• A new furnace, woodstove, fireplace, water softener, or water heater
• A new driveway or resurfacing a driveway, re-shingling a roof or painting of a house
• Landscaping – new sod, perennial shrubs and flowers, trees, etc.
• Swimming pools (permanent – in-ground and above-ground)
• Fixtures – blinds, shades, shutters, awnings, lights, fans, etc.
• Associated costs such as permits, professional services, equipment rentals, and incidental expenses

Examples of non-eligible expenses

• Furniture, appliances, tools, and audio and visual electronics
• Routine repairs, maintenance and cleaning (e.g., furnace cleaning, snow removal, lawn care, pool cleaning, house cleaning)
• Financing costs

View some examples of calculation