Are home renovations tax deductible in Canada?

Can I claim home renovations on my taxes in Canada?

There is currently a Canada Greener Homes Initiative that provides both grants and loans for home evaluations and retrofits, Joan. 

See the below chart for eligible retrofits. 

Home improvement Amount Good to know
Space and water heating Up to $5,000 If a pump is installed in a home by a licensed professional and is on the eligible product list for ground source heat pumps, air source heat pumps or heat pump water heaters, it may qualify. The pump must be purchased in Canada or from a distributor located in Canada. 
Home insulation Up to $5,000 Upgrades include attic, cathedral ceiling, flat roof, exterior wall, exposed floor, basement or crawl space.
Air-sealing Up to $1,000 Air sealing any cracks or gaps around the house to regulate air flow.
Windows and doors Up to $5,000 Replace doors, windows, or sliding glass doors with Energy Star-certified models.
Thermostat Up to $50 Add a smart thermostat, when combined with another retrofit.
Renewable energy Up to $5,000 Install a solar photovoltaic system (converts sun rays into energy).
Resiliency measures Up to $2,625 Implement measures to protect your home from environmental damages (combined with another retrofit).

Also, know that there are other various provincial home renovation tax credits. If you live in British Columbia, Saskatchewan, Manitoba, Ontario, Quebec or New Brunswick, check the appropriate government website for details. 

Eligibility for home renovations tax credits

Home renovation grants may save you money on eligible home retrofits. Here are some of the eligibility criteria:

  1. Your application must be approved by Natural Resources Canada.
  2. You must do a pre- and post-retrofit EnerGuide evaluation.
  3. You have to complete at least one eligible retrofit recommended by your energy advisor.
  4. You have to purchase equipment and products from Natural Resources Canada’s approved products list, specifically for windows and heating equipment.
  5. Installations must be completed by a licensed professional, except for thermostats.
  6. All products must be purchased in Canada or from a distributor located in Canada.

Note: There can be expenses related to retrofit eligibility. For example, EnerGuide home evaluations can cost between $500 to $1,000, Joan. However, you can get up to $600 as a grant to put towards this cost. And, you can also apply for interest-free loans of up to $40,000 amortized over up to 10 years. 

What home improvements provide tax savings for 2023?

There are many renovation and improvement tax credits. Some are applicable, and some are not. Here’s a breakdown:

Federal Home Renovation Tax Credit

I still get questions about the Federal Home Renovation Tax Credit, which was only available for a single year back in 2009. This was an extremely broad tax credit for all renovations done to your home with virtually no criteria. It’s not relevant to you right now, Joan.

Federal Home Accessibility Tax Credit

There is a Federal Home Accessibility Tax Credit that was introduced in 2016 for those over age 65 or who qualify for the disability tax credit. Renovations of up to $10,000 ($20,000 starting with the 2022 tax year) that improve accessibility or reduce the risk of harm within a home generally qualify. These expenses may also qualify for a medical expense tax credit.