Taken by Brad Noble on June 29, 2009.

Between getting married and working on an article about how to get married without breaking the bank, I've missed the past couple of deadlines. Bad Neil Bad! So tonight, since my wedding article isn't ready yet, a quick one about this year's one-time only home renovation tax credit.

Most Canadians have probably encountered some ad or another trumpeting this tax credit. The basics of it are that any renovation work done on your home qualifies for a federal tax credit - this could bring up to $1350 back into your pocket. I was looking into this as it may be an incentive to get my act together on replacing some doors and window coverings around the house that I've been thinking need to be done.

What Qualifies?

In order for an expense to qualify, it must be work done to a residence which could be claimed as a primary residence (apparently cottages count). If you rent a portion of your home, only work done to non-rental portions qualify. You can, however deduct expenses to rental areas against your rental income, like you've always been able to.

Amounts over $1000 but less than $10,000 are deductible. As with most tax credits, you get 15% of the "face value" back when you file your return. In order to qualify, the expense must be incurred between January 27, 2009 and February 1, 2010, and can't be payments for agreements you'd already signed before January 27. Claim all expenses on your 2009 return, since you won't get another chance in 2010. Reasonable backup is required, such as a contractor invoice with GST number, describing the work done. Cash only contractors are unlikely to provide this information, particularly the GST number, since the whole point of going cash only is to avoid taxes. That kind of spending doesn't qualify for the credit.

The most complicated thing is what kind of work qualifies. The defining characteristic of "renovation" under the tax credit is that the value of your upgrade would be reduced if you moved it from one house to another. Custom blinds count, while standardized blinds you picked up at home depot don't. A new kitchen counts, but stock hanging cupboards do not. And yes, my doors do qualify even if they are stock because they wouldn't realistically be removed from the house.

You May Already Qualify

The big surprise for me was that I already qualify for this tax credit, even though I haven't done any work yet. This is because my primary residence is a condo, and my condo corp has done some extensive renovations of common areas. According to the CRA website, I'm allowed to claim my portion of eligible expenses - that would be my split by unit factor, in my case 5.21%. So the government already owes me $85 - ($30,000x5.21%-1000)x15%. It also means that for everything that I spend before the end of the year, I'll get a 15% rebate come March.

If you live in a condo or coop, make sure to ask your board for a record of their renovation expenses this year. It's worth money in your pocket.

Spend Money to Make Money

This isn't likely to make you any money. Most research shows that no home renovations increase your home's value more than they cost. The credit may make some of the ones that come close - such as building a deck - viable, but it's pretty marginal at best. Don't renovate your house just because the government is pitching in a few extra dollars. However, do consider moving forward renovation plans to take advantage of the credit while it lasts.