Archive for the ‘SAVING ON WINDOWS & DOORS’ Category

Government Tax Credit for Renovations

Tuesday, April 14th, 2009

Many people are confused about the government tax credits that are available for home renovation. For people living in Quebec, there are 2 credits available: federal and provincial.

The federal tax credit is for home renovations only, meaning that you must be a home owner and be renovating for residential use only. The tax credit works thusly: Once you have spent $1 000.00, you are entitled to a 15% credit up to a maximum dollar amount of $1 350.00. Therefore, in order to receive the maximum tax benefit from the federal government $10 000.00 must be spent; 10 000 – 1 000 = 9 000. The 9 000 is what the 15% applies to; 9 000 x 15% = 1 350.

For example, Jim decides to redo his kitchen. The renovation is going to cost him a total of $8 500.00. This means that the government tax credit that he is eligible for is 8 500 – 1 000 = 7 500 x 15% = 1 125. Jim is therefore eligible for a $1 125.00 federal tax credit.

The Quebec provincial tax credit works basically the same way, even though the amounts differ. To be eligible for the Quebec tax credit, you have to spend a minimum of $7 500.00. Once this amount has been reached, you are eligible for a 20% tax credit up to a maximum of $2 500.00. In order to receive the maximum tax benefit available from the Quebec government, $20 000.00 must be spent; 20 000 – 7 500 = 12 500. The 12 500 is what the 20% applies to, therefore 12 500 x 20% = 2 500

Let’s say that Sally has decided to change all of the windows in her house, and that this will cost her $15 000.00. She is therefore eligible for both the federal government tax credit and Quebec provincial tax credit.  The amount she is entitled to from the Quebec government is: 15 000 – 7 500 = 7 500 x 20% = 1 500. The amount she is entitled to from the federal government is the maximum amount of 1 350, since 15 000 – 1 000 = 14 000 x 15% = 2 100, which exceeds the maximum allowable amount. Therefore, she receives a total tax credit from the 2 governments for 1 500 + 1 350 =   $2 850.00.

The maximum amount that you can be eligible for is if you spend $20 000 or more, since you would get the maximum in both cases. Ergo, you would receive $2 500.00 from the Quebec government as well as $1 350.00 from the federal government giving you a total tax credit of
$3 850.00

Michael Kizner
Les Industries Martin
8178 Montview, TMR, Qc
514-486-4635
www.martinindustries.ca