Write Them Off: Home Accessibility Costs

Evelyn Jacks

“My 69-year-old mother now lives with us, and we had to make renovations to our home so that she could be safe after her accident at her personal care home.   Can we write off the costs of those renovations?”  It’s not an uncommon question this year as Canadians coped with the stress of the pandemic. The Home Accessibility Tax Credit can provide some financial relief in these cases.

This non-refundable credit is available for the cost of renovations or alterations to a dwelling that allow a taxpayer who is 65 or older or who is eligible for the disability amount, so that these individuals may gain access to or be more mobile or functional within the dwelling.

The maximum credit is 15% of $10,000 or $1,500.   Where more than one taxpayer qualifies for this credit, the credit may be split between taxpayers so long as the maximum $10,000 claim is not exceeded.

The requirements for the renovations are similar to those for claiming renovations for disabled individuals as a medical expense.  In a rare double-dip allowed by the Income Tax Act, where the expenditure qualifies for both credits, both credits may be claimed.

For the 2020 tax year, the Worksheet for the Return is again used to enter the information relevant to the claim. The following definitions from the CRA are helpful in determining who qualifies:

"Eligible Dwelling".  To qualify for the Home Accessibility Tax Credit, an eligible dwelling must be a housing unit owned by an individual that is ordinarily inhabited, or be reasonably expected to be ordinarily inhabited, at any time during the taxation year by:

• A qualifying individual
• An eligible individual of a qualifying individual so long as the qualifying individual does not, throughout the taxation year, own and ordinarily inhabit another housing unit in Canada

An eligible dwelling includes the land subjacent to the housing unit and up to 1/2 hectare of contiguous land (or more, if necessary, for the use and enjoyment of the housing unit as a residence).

"Eligible Individual".  An "eligible individual" in respect of a "qualifying individual" is eligible to claim the Home Accessibility Tax Credit if they have claimed any of the following credits in respect of the qualifying individual:

• The spouse or common-law partner amount (or could have had the qualifying individual had no income)
• Eligible dependant amount (or could have if the qualifying individual was not married or in a common-law relationship and the qualifying individual had no income)
• Canada caregiver amount (or could have if the qualifying individual was over 18 and had no income)
• Infirm dependant amount (or could have had the qualifying individual was over 18 and had no income or was dependant by reason of infirmity)

"Qualifying Expenditure".  A "qualifying expenditure" of an individual means an outlay or expense that is made or incurred during the taxation year in respect of a qualifying renovation of an eligible dwelling.  This includes:

• The cost of goods acquired or services received during the year
• The cost of permits required for the qualifying renovation
• Outlays or expenses for the rental of equipment used in the course of the qualifying renovation

Expenditures for the following do not qualify for the Home Accessibility Tax Credit:

• Expenditure to acquire
  • property that can be used independently of the qualifying renovation
  • household appliances (excluding furnaces and other heating systems)
  • electronic home-entertainment devices
• Annual, recurring or routine repairs or maintenance
• Costs for housekeeping, security monitoring, gardening, outdoor maintenance or similar services;
• financing costs
• Expenses incurred primarily for the purpose of increasing or maintaining the value of the eligible dwelling
• Expenses incurred for the purpose of gaining or producing income from a business or property
• Goods or services provided by a person not dealing at arm's length with the individual, unless that person is registered for the GST/HST
• Expenses that can reasonably be considered to have been reimbursed, other than government assistance amounts

"Qualifying Individual".  A "qualifying individual" means an individual…

• Who is 65 or older by the end of a taxation year
• Is eligible for the disability amount

"Qualifying Renovation".  A "qualifying renovation" means a renovation or alteration of an eligible dwelling of a qualifying individual or an eligible individual in respect of a qualifying individual. The renovation or alteration must be of an enduring nature, integral to the eligible dwelling and must be undertaken to:

• enable the qualifying individual to gain access to, or to be mobile or functional within, the eligible dwellin
• reduce the risk of harm to the qualifying individual within the eligible dwelling or in gaining access to the dwelling.

Excerpted from the 2021 Advanced Personal Tax Update Course as featured during the January 20 Virtual CE Summit. This course provides all the most recent tax updates to filing the 2020 tax return.  You can still enrol in the course online.