Are you considering renovating your home soon? Do you have any residents in your home that are a senior or considered disabled?
If so, you should keep reading. We are going to talk about a tax credit that you could take advantage of if you live in Canada.
Known as the home accessibility tax credit for seniors and persons with disabilities or the home accessibility tax credit for short, this federal credit focuses on improving physical accessibility for those who have trouble with this. That means that your home could qualify for this credit if you're helping towards this effort.
To learn more about this opportunity to get money back on your taxes, keep reading. We'll cover everything you need to know.
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What Is the Home Accessibility Tax Credit for Seniors and Persons With Disabilities?
Since its implementation in 2016, the home accessibility tax credit has provided financial relief for those individuals or companies that are working to provide assistance for people who are elderly or disabled.
Since it is a tax credit, the amount of money that the Canadian government gives back to you will be deducted from your taxes at the end of the year. So, you shouldn't expect a quick payment back from the government.
The tax credit counts annually. This means that any additional renovations that you need to make can be counted on the tax year that they're done in, even if it's a different year than the original renovation.
Who Qualifies for the Home Accessibility Tax Credit?
If you're looking to renovate your home for an individual who is elderly or disabled, you might be wondering if you qualify for this tax credit.
In order for your renovation to count for the credit, you as an individual need to qualify, and your home needs to qualify.
What Kind of Individual Qualifies for the Tax Credit?
The most streamlined way for you to qualify for this tax credit is if you yourself are the elderly or disabled individual that the renovations are being done for.
To qualify as an elderly individual, you must be at least 65 years old by the end of the tax year. To be considered a disabled individual, you must qualify for the disability tax credit.
It's likely that you qualify for the disability tax credit if you qualify for disability insurance.
What Are the Qualifications for the Disability Tax Credit?
In order to qualify for the disability tax credit, you must meet one of the following criteria:
- You are blind
- You are markedly restricted in completing one of the basic activities of daily living
- You are significantly restricted in completing two or more of the basic activities of daily living
- You require therapy to sustain your life
Be sure to ask your physician about your abilities to complete the basic activities of daily living if you are considering applying for this tax credit.
In addition to these personal criteria, your illness must meet all of the following criteria:
- The illness must have been present or is expected to be present for at least 12 months
- The illness is present all of the time or at least 90% of the time
What if I Care for Someone Who Qualifies?
If you are the spouse, common-law partner, or another related caregiver of a patient who meets the qualifications for the tax credit, you could claim the credit on your taxes.
However, you must be mindful that both parties cannot claim the tax credit on their taxes. We recommend that you're careful with claiming this credit so that you don't accidentally get in trouble for claiming the credit twice.
Check with the qualifying individual before you assume that you're going to be the one who takes the credit.
What Kind of Dwelling Qualifies for the Tax Credit?
In order to qualify for the home accessibility tax credit, your dwelling must also meet certain requirements as well.
The dwelling that you're having the renovation done in qualifies for the tax credit if it is located in Canada and meets one of the following requirements:
- The housing unit is owned (at least partially) by the qualifying individual, and that qualifying individual lives there ordinarily
- The housing unit is owned (at least partially) by the qualifying individual's caregiver, and that qualifying individual and their caregiver lives there ordinarily
To be clear, the qualifying individual can have more than one qualified dwelling within a year. However, they may only reside in one qualified dwelling at a time. This is an especially important distinction to make for individuals who move within the year.
In the case that a qualifying individual has more than one eligible home in a year, that individual cannot claim more than $10,000 in renovation expenses across all of the dwellings.
What Kinds of Home Accessibility Expenses Qualify?
You can't apply the tax credit to any kind of home renovation. The renovation has to be something that will positively impact the qualifying individual. It must meet one of the following criteria:
- The renovation must allow the qualifying individual (disabled or elderly individual) to function within the eligible dwelling
- The renovation must lower the risk for the individual within the dwelling or upon entering the dwelling
Also, the renovation must be permanent. If you have a temporary item that is meant to help the qualifying individual, this will not count for the tax credit.
What if I Do the Renovation Myself?
If you perform the renovation yourself as the qualifying individual, you can be reimbursed for the following items:
- Building materials
- Building plans
- Equipment rentals
You should note that your labour and your existing tools that you're using are not counted in the expenses that are credited.
What if a Family Member Does the Renovation?
If a family member of the qualifying individual does the renovation, no aspect of their work will be eligible for the tax credit. That is unless that family member is registered for the goods and services tax/harmonized sales tax.
This rule deters individuals from hiring unqualified family members to perform this kind of work. If the family member provides less-than-safe accommodations, the qualifying individual could be harmed more than they're helped by the change.
What if a Professional Does the Renovation?
Calling in professionals to implement the accommodations for you is the easiest way to ensure that the tax credit will actually count. All you have to do is make sure that you get the work that was done in writing from the contractor.
Then, save all of your receipts to ensure that you're going to get the amount of credit that you deserve back for the price that you paid for the work done.
What Are Some Examples of Expenses That Do and Do Not Qualify for the Home Accessibility Tax Credit?
If you're worried about your accommodation not counting for the home accessibility tax credit, take a look at the following examples for some inspiration:
- Grab bars
- Safety rails
- Roll-in shower stalls
- Shower pan
- Walk-in bathtub
- Wheelchair lifts
- Non-slip flooring
- Lever-style handles or faucets
- Widening doorways
All of these accommodations qualify for the tax credit. Use this list to get your mind thinking about some of the best accommodations to take care of your health.
Here are some examples of things that don't count for the credit:
- Cost of maintenance or repairs
- Household appliances
- Entertainment devices
- Labour costs from family members or yourself (labour from professionals counts)
Refrain from trying to claim these costs and similar costs on your tax return. You're not going to get credit, and you'll have likely wasted your money on something that you wouldn't have invested in otherwise.
What Are Some Examples of Those Who Do and Do Not Qualify for the Home Accessibility Tax Credit?
It can get a little confusing about who does and who does not qualify. Let's look at three different examples of individuals and their caregivers that may or may not qualify for the home accessibility tax credit.
Eddy and Mary have lived in Canada their entire lives, and they got married six years ago. Eddy is blind, and Mary cares for him on a daily basis. She is looking to add a bar in the shower so that Eddy can get in more easily.
Is Eddy or Mary eligible for the home accessibility tax credit? Why?
Eligibility: This first example should be relatively clear. Eddy is blind, which makes him eligible for the disability tax credit per the qualifications that we previously discussed.
Since Mary cares for him, Eddy or Mary could apply for the tax credit. However, they cannot both apply for the credit. Mary should only apply for the tax credit on Eddy's behalf if Eddy is not going to apply for the credit on his own tax return.
Christina is 64 years old and wheelchair-bound. Her birthday is in September, and she is looking to gift herself a wheelchair ramp to access her backyard more easily.
Is Christina eligible for the home accessibility tax credit? Why?
Eligibility: Christina is going to be turning 65 before the end of the year, so she does meet the age requirement. Plus, she is wheelchair-bound, so she is able to meet the disability requirements.
In addition, a wheelchair ramp is an eligible expense. Christina will be able to apply for the home accessibility tax credit, and enjoy her new wheelchair ramp.
Joe is a 21-year-old man who is looking to install non-slip floors for his mother, who is 63 years old. He is visiting from out of town and has noticed that she has been complaining about the flooring throughout her house being hard to walk on. He wants to buy non-slip floors for her since she didn't budget for this in a retirement plan.
Eligibility: As sweet as this gesture is, neither person is eligible for the credit. For one, Joe's mother is not 65 years old, neither would she turn 65 by the end of the year.
Second, the story does not describe her as an individual who would be eligible for the disability tax credit. Therefore, she does not meet that requirement either.
Joe is not eligible either. While he is acting like somewhat of a caregiver in gifting the non-slip floors, he is not living in the home where the repairs are being done.
In order for Joe's mother to qualify for a tax credit on this kind of renovation, she would have to be 65 by the end of the year. They could wait a year or two to complete the renovation.
In order for Joe to qualify for this tax credit, his mother would have to meet the age requirement and Joe would have to move back in with her.
How Do I Claim the Home Accessibility Tax Credit?
To claim the credit, you should complete line 31285 on your tax return. Plus, you should make sure to complete a schedule 12. This document tracks home accessibility expenses.
Make sure that you've accumulated the dates when the accommodations were put in place, the kinds of accommodations they were, and who did the work. You'll need this information for the tax form.
Always make sure to keep your receipts in case the CRA (Canada Revenue Agency) asks for them later.
Can I Claim Double or Triple Credit?
You could claim your home accessibility charges more than once. Many accommodations to the home also count under medical expenses.
If your accommodations meet the requirements of the home accessibility tax credit as well as the requirements for the medical expense tax credit, you can collect both credits on a single change.
Where Can I Find More Information About Tax Credits?
After reading about the home accessibility tax credit and all of the money you could get back on your taxes for doing a great thing for a beloved senior or disabled individual in your life, we're sure that you're ready to hear about more tax credits you could get.
The Canada Revenue Agency has a plethora of tax credits that you could be claiming on your taxes. To learn more, check out the rest of our blog here at Insurdinary.