Home renovation tax credits: what you need to know

What’s a home renovation tax credit? 

Are you thinking of renovating your entire house, installing a heat pump or insulating a wall that’s letting in cold air? If you’re on the fence about doing work on your property, the prospect of tax incentives could make your decision easier.  

A tax credit is an amount you can deduct from the total amount of your tax return. Thanks to this reduction, you may even benefit from a lower tax rate. You could think of it as a partial reimbursement for your renovation project.  

What work qualifies for a tax credit? 

The federal government, as well as the provinces and territories, offer various programs to encourage certain types of work and repairs. These tax breaks can cover the complete renovation of a home, improving its energy efficiency or making it more accessible to the elderly or those with a disability. 

What are the eligibility criteria for home renovation tax credits? 

While requirements for obtaining tax credits vary from program to program, you generally need to meet certain conditions regarding:  

• Your income, age or disability.  
• The type of dwelling, whether it’s a single-family home, condominium, apartment building or social housing. 
• The type of renovation being undertaken.  
• The amount you’re spending on the work.   

Note that according to the Canada Revenue Agency, an eligible dwelling often means your principal residence or, in some cases, that of a family member or dependent. 

What are some federal home renovation tax credits? 

The Canada Revenue Agency offers a number of tax measures, including tax credits, that could reduce the cost of your renovations. Here are the main ones: 

• Tax refunds for substantial renovations
  Planning to completely modernize your home or apartment building? You could benefit from a tax break. This program offers a partial refund of the GST/HST (or GST/QST in Quebec) paid on major renovations. To take advantage of this program, the work must cover more than 90% of the living area (or an addition that doubles the size of the living area) – so redoing your basement or building a solarium wouldn’t be considered an eligible renovation. 
  → Learn more about the substantial renovation GST/HST rebate program (external link)
  
  
• Home accessibility deductions
  If you’re over 65 or have a disability, you can get partial reimbursement for work that makes it easier for you to get around or perform everyday tasks. Examples include the installation of an access ramp or stairlift, or the renovation of a bathroom to accommodate a wheelchair-accessible shower or walk-in bathtub. You can claim eligible expenses of up to $20,000 on your tax return. 
  → Learn more about home accessibility expenses (external link)
  
  
• Multigenerational home renovation tax credit
  If you’d like to live under the same roof as your aging parents while preserving some privacy, this program lets you create a self-contained secondary unit in an eligible dwelling, provided that one of the people living there is over 65 or has a disability. You can obtain a tax credit representing 15% of eligible expenses, up to a maximum of $50,000 (a $7,500 reimbursement).
  → Learn more about the multigenerational home renovation tax credit (MHRC) (external link)
   

What are some provincial home renovation tax credits? 

Some provinces also offer tax breaks to enable people over 65 or those with disabilities to live safely and independently in their own homes.  

Other provincial deductions apply to renovations that improve a home’s energy efficiency or environmental footprint. For example, you could receive a tax credit for: 

• Installing a new geothermal or solar heating system
• Installing energy-efficient windows or doors
• Thermal insulation
• Bringing a septic tank up to standard
• To learn more about the deductions available in your province, consult the tax packages on the Canada Revenue Agency website (external link).

→ Check out our article on preparing a home renovation budget 

How can I get a home renovation tax credit? 

To reduce the cost of your renovation through a tax break, follow these steps:  

• Review the various programs available at both the federal and provincial levels. You can combine several tax breaks to reduce your tax liability. 
• Make sure you meet the eligibility criteria for the programs you’ve selected.  
• Gather the required documents (invoices, estimates, etc.) and keep them on file for six years in case of a Canada Revenue Agency audit. 
• When you file your tax return, include eligible home renovation expenses where indicated. 

What other tools are available to reduce renovation expenses? 

In addition to tax credits, you may be eligible for federal and provincial grants. Before starting any work, do your research to find out what measures could save you money, including consulting specialists and your accountant.  

→ Check out our article on home renovation grants