Harmonized Sales Tax (HST) & The Home Renovation Tax Credit
Harmonized Sales Tax (HST)
The Ontario government announced that as of July 1st, 2010, you & I will be paying more for pretty much everything we buy. And yes, that will include home improvements, I am sorry to say.
So, say goodbye to the dreaded GST and hello to the new and improved HST - Harmonized Sales Tax. Almost sounds like a pleasant song should be ringing in our heads, eh? By next summer, most of our purchases will be subject to a 13% sales tax. That's right, most of the goods and services that are currently only charged the 5% GST - like renovations - will be hit with the 13% HST. Oh, what will those smart folks in Ottawa & Toronto come with up for us next?
Bottom line is that for those considering a renovation project, having it done before next June will end up saving the added 8% hit that is surely coming to all of us.
Home Renovation Tax Credit (HRTC)
The federal government recently announced Home Renovation Tax Credit for the 2009 tax year. Through this program, homeowners may be eligible to realize a tax credit of up to $1,350.00! But remember, all work must be billed before February 1, 2010.
What is the Home Renovation Tax Credit (HRTC)?
The proposed HRTC is a non-refundable tax credit for work performed or goods acquired in respect of an eligible dwelling
What is meant by eligible dwelling?
An eligible dwelling is a housing unit that is eligible to be an individual's principal residence or that of one or more of their family members, at any time between January 27, 2009 and February 1, 2010. In general, a housing unit is considered eligible to be an individual's principal residence where it is owned by the individual and ordinarily inhabited by the individual, the individual's spouse or common-law partner, or their children. This means that any dwelling that you own and use personally could qualify, including your home or your cottage
What is the eligibility period?
The credit will be based on eligible expenditures for work performed or goods acquired after January 27, 2009, and before February 1, 2010. Expenditures incurred pursuant to an agreement that was entered into before January 28, 2009, will not be eligible for the credit.
Who will be eligible for the credit?
Eligibility for the HRTC will be family based. A family will generally be considered to consist of an individual or an individual and his or her spouse or common-law partner, including children who will be under 18 years of age, at the end of 2009. A family will be allowed a single credit that may be shared within the family. If two or more families share the ownership of an eligible dwelling, each family will be eligible for their own separate credit (i.e. each up to $1,350) that will be calculated on their respective eligible expenditures
How will the credit be calculated?
The credit will only be available for the 2009 tax year and applies to eligible expenditures of more than $1,000, but not more than $10,000, resulting in a maximum credit of $1,350 ($9,000 x 15%).
What are eligible expenditures?
To be eligible, expenditures incurred in relation to a renovation or alteration to an eligible dwelling (or the land that forms part of the eligible dwelling) must be of an enduring nature and integral to the dwelling, and includes the cost of labour and professional services, building materials, fixtures, rentals, and permits.
Please feel free to email me with any questions you may have!