Beginning with the 2012 taxation year, taxpayers in Ontario and B.C. who are 65 or older may benefit from new provincial tax credits if they make renovations which allow them to be more mobile or functional in their homes. The British Columbia Seniors’ Home Renovation Tax Credit is calculated as 10 per cent of eligible expenses of up to $10,000, resulting in a maximum credit of $1,000. The Ontario Healthy Homes Renovation Tax Credit is also based on the first $10,000 of eligible expenses but has a rate of 15 per cent, providing a maximum credit of $1,500. In both provinces, the credit may also be claimed by qualifying relatives of any age who share their homes with a senior.
Unlike the federal Home Renovation Tax Credit of several years ago, both credits are refundable. This means you can use the credits even if you do not have any provincial tax payable. In contrast, the federal credit was non-refundable. This particular aspect of it was not well publicized at the time, with the result that many lower-income taxpayers spent substantial amounts of money on home renovations only to discover they were unable to utilize the credit because they had no federal tax payable.
The federal credit was a temporary measure for 2009 only; in contrast, the provincial credits will be permanent. This gives you the ability to spread expenses for a major renovation over a period of years. However, it must be emphasized that expenditures will only be eligible for the provincial credits if their purpose is to make you more mobile or functional within your home. Examples would include walk-in bathtubs, wheel-in showers, grab bars and non-slip flooring. Examples of ineligible expenditures would include general repairs and maintenance or expenses whose primary purpose is to increase the value of the home. Devices are also ineligible. So you would not be able to claim ovens or refrigerators, even if they are specifically designed for mobility-impaired persons. And you will not be able to claim equipment for home medical monitoring.
You do not have to qualify for the disability tax credit in order to claim the provincial credits. However, if you are disabled, the expenditures may also qualify as medical expenses under paragraph 118.2(2)(l.2). This provision allows those who lack normal physical development or have a severe and prolonged mobility impairment to claim as medical expense renovations or alterations required to gain access to or be more mobile or functional within their home.
Unlike the provincial credits, medical expenses are non-refundable. They may also be claimed only to the extent that they exceed three per cent of your net income. However, assuming that you could claim the full amount, a $10,000 medical expense claim in B.C. would be worth $2,060 (calculated as $10,000 x 20.6%). Including the provincial credit, this would be increased to $3,060. In Ontario, the medical expense claim would be worth $2,050 (calculated as $10,000 x 20.05%). Including the provincial credit, this would be increased to $3,550.
In B.C., only those expenses incurred between April 1, 2012 and December 31, 2012 may be claimed on the 2012 return. In Ontario, expenses incurred between October 1, 2011 and December 31, 2012 may be claimed on the 2012 return.