Medical Expenses: Construction and Renovation Expenses

Consider how common out of pocket medical expenses are and how many millions of people miss claiming them. We overview a few of those “dark horses” below.

Plus, we invite you to take this opportunity to learn more in the Income Tax Fundamentals Certificate Course. Take the online course only, or supplement it with 4 half day seminars that go into depth with experienced and knowledgeable instructors. You also save on tuition to the May 15 early-bird deadline when you enrol in the Full Program!  Learn more here. Taking a personal income tax course is one of the soundest investments one can make for financial health. Now let’s discuss claiming Construction and Reno Expenses.

Construction and Renovation Expenses Modifying a living space for medical purposes is often eligible for the Medical Expense Tax Credit (METC).

In addition to claiming the Medical Expense Tax Credit on Line 31300, certain construction and renovation expenses may also be eligible for other tax credits such as the Home Accessibility Tax Credit (HATC) on line 31285 or the Multigenerational Home Renovation Tax Credit (MHRTC) on line 45355.

Home Accessibility Tax Credit (HATC): This non-refundable tax credit can be claimed for renovations and alterations that make a ‘qualifying dwelling’ more accessible for a ‘qualifying individual’. In order to qualify, the renovations must enable the individual to either gain access to or function within their home, or reduce the risk of harm. The primary goal of the HATC is to help individuals remain in their homes longer as they age and experience changes in mobility.

A qualifying individual must be 65 years of age by the end of the tax year or have a valid Disability Tax Certificate on file with the CRA. The HATC can be claimed by an eligible individual which could include the qualifying individual themselves, their spouse or common-law partner, their parent, grandparent, child, brother, sister, aunt, uncle, nephew or niece of either the qualifying person or their spouse or common-law partner.

An eligible dwelling is a housing unit located in Canada, owned and ordinarily inhabited by the qualifying individual or the eligible individual. The surrounding land, up to a maximum of ½ hectare, is also considered to be part of the home.

Eligible expenses include:

• Building materials
• Fixtures
• Equipment rentals
• Building plans and permits
• Tub-to-shower conversions
• Driveways that provide access to public transit
• Widening doorways to accommodate wheelchairs
• Wheelchair ramps, stair glides and grab bars/rails
• Installing non-slip flooring

Ineligible expenses include:

• Amounts paid to acquire a property
• Cost of annual, recurring or routine repairs & maintenance
• Household appliances
• Electronic home entertainment devices
• Costs of housekeeping, security, monitoring, gardening, or outdoor maintenance
• Financing costs associated with the qualifying renovation
• Renovations primarily made to increase or maintain the value of the dwelling
• The value of an eligible individual’s labour costs and tools

The total expenses claimed in any tax year cannot exceed $20,000. The claim is then multiplied by 15% for a maximum credit of $3,000. It is important to note that any eligible expenses that also qualify for the METC can be claimed as a medical expense and under the HATC.

Multigenerational Home Renovation Tax Credit (MHRTC): This refundable tax credit allows eligible individuals to claim certain renovation expenses for creating a self-contained secondary unit that enables a senior or adult who is eligible for the DTC to live with a qualifying relative. The secondary unit does not need to be part of the existing structure but must be on the same land (up to 1/2 hectare). Eligible individuals can claim up to $50,000 in qualifying expenditures for a 15% tax credit with a maximum refundable credit of $7500.

The secondary unit must meet all of the following conditions:

• Be self-contained, with a private entrance, kitchen, bathroom and sleeping area
• Be newly constructed or created from an existing living space
• Meet all applicable local requirements, permits, codes, bylaws

One of the individuals living in either the existing dwelling or the new secondary unit must be a qualifying individual. This includes someone who is either 65 years of age by the end of the tax year or qualifies for the DTC at any time in the renovation period. The credit may be claimed by the qualifying individual or the eligible individual. The definition of qualifying and eligible individuals is the same as for the HATC.

Regardless of how long the renovations take, the credit is claimed in the year that the renovations are completed. The qualified individual must occupy the secondary unit within 12 months of its completion. Only one renovation can be claimed for a qualifying individual during their lifetime. 

It is important to note that any eligible expenses that also qualify for the METC cannot be claimed as a medical expense.

Other Construction & Renovation Medical Expenses: Many expenses can be claimed or partially claimed, provided there is a medical diagnosis to support the need for the expense. In many cases, the individual will also have a DTC on file due to a severe and prolonged condition.

Driveway Access – reasonable amounts paid to alter the driveway for a person that has severe & prolonged mobility limitations can be eligible for the deduction.

Furnace - the cost of an electric or sealed combustion furnace to replace an existing furnace is eligible if the replacement is for a person with a severe chronic respiratory ailment or immune system disorder.

Renovation or Construction Expenses - the cost for renovations or construction that provide a person with access to, or greater mobility and function within, their home due to a severe and prolonged mobility impairment or lack of normal physical development can be eligible for this deduction.

Devices & Equipment – many health-related devices and equipment can be claimed as long as there is a documented need for them:

• Air conditioner – limited to the lesser of $1,000 or 50% of the amount paid
• Air filter, cleaner or purifier
• Audible signal devices & visual or vibratory signalling devices
• Bathroom aids – grab bars, raised toilet seats, bath chairs
• Stair glides/lifts
• Lifts or transportation equipment – designed to help with building or vehicle access
• Vans – 20% of the amount paid for a vehicle that was or will be adapted, up to a maximum of $5,000
• Vehicle devices designed to help mobility-impaired individual in driving

While whirlpool bath treatments do qualify as a medical expense, a hot tub installed at home, even if prescribed by a medical practitioner, is not eligible.

Any medical expenses that are claimed must be paid by the individual or their spouse/common-law partner and must not have been reimbursed nor expected to be reimbursed. Consult your Tax Preparer for more information on qualifying expenses.

Bottom Line – be sure to claim all the deductions and credits a family is entitled to every tax year – it’s all about what you keep!