Tax Credits Available to Seniors

 Guest Writer: David Plandein, CPA, CGA

The federal government has also introduced a Home Accessibility Tax Credit which will be effective for 2016 and subsequent tax years. Here is a summary of the two tax credits which are now available:

BC Seniors’ Home Renovation Tax Credit

The BC Seniors’ Home Renovation Tax Credit can be claimed by those over 65 years, or a related eligible person who lives with the senior, and may provide a refund of up to $1,000 per year (10% of eligible renovations). The Seniors’ Home Renovation Tax Credit is refundable, meaning that you will receive money back from the credit even if you don’t owe any income tax.

The home must be located in BC and be the seniors’ principal residence during the year. A senior can live in more than one principal residence during the year and claim the renovation tax credit on more than one residence so long as the maximum credit does not exceed $1,000 in total for all of the principal residences.

To be considered an eligible renovation expenditure, the renovation must provide a senior greater access, mobility or functionality into or within the residence, and be of an enduring nature. Expenditures for maintenance services, medical monitoring and home security, or for the principal purpose of increasing the value of residence will be disallowed.

The BC Home Renovation Tax Credit can be claimed be a senior or an eligible related person for eligible expenditures made after March 31, 2012. If a person has missed claiming this tax credit on their tax return, he or she may request an adjustment to the tax return for the year it was missed.

The BC Home Renovation Tax Credit will also apply in the case of people who qualify for the Disability Tax Credit and are under the age of 65, where home renovations are started after February 16, 2016.

Home Accessibility Tax Credit

Beginning in 2016, the federal government has introduced a home accessibility tax credit for renovation expenditures made on the behalf of seniors and individuals who qualify for the Disability Tax Credit. This federal Home Accessibility Tax Credit may also be claimed by an eligible individual other than the senior or disabled individual so long as this eligible individual might be able to claim the senior or disabled individual as their spouse, an eligible dependent or infirm dependent, or claim the caregiver tax credit for that person.

Unlike the BC Seniors’ Home Renovation Tax Credit, the federal Home Accessibility Tax Credit is a non-refundable tax credit – meaning that the tax credit may only be used to reduce the amount of tax payable by the person claiming the tax credit. The tax credit will be calculated at 15% of eligible expenditures and may be split between the qualifying individual and an eligible individual so long as the total credits claimed by both people do not exceed 15% of the lesser of the total qualifying renovations, or $10,000.

To be considered a qualifying renovation expenditure, the renovation must be made to an eligible dwelling owned by a qualifying individual or an eligible individual (generally the principal residence of the senior or disabled person) and must be of an enduring nature. It must also be undertaken to improve the mobility of the qualifying individual within the dwelling, improve the accessibility of functionality of the dwelling for him or her, or reduce the risk of harm for the qualifying individual in accessing or living in the dwelling.

Most other conditions to qualify for the federal Home Accessibility Tax Credit are similar to the BC Seniors’ Home Renovation Tax Credit.

If you think that you qualify for these tax credits, print off this article and take it to your accountant to review your eligibility and determine your eligible expenditures.

For more information click here.