Are home renovations tax deductible in Canada?

Canada Greener Homes Loan

The Canada Greener Homes Loan provides up to $40,000 of interest-free financing to improve a home’s energy efficiency. Loans can range from $5,000 to $40,000 and are amortized over 10 years. According to the federal government, eligible retrofits include:

• Home insulation, up to $5,000: Upgrade your eligible attic, cathedral ceiling, flat roof, exterior wall, exposed floor, basement, and crawl space.
• Air-sealing, up to $1,000: Perform air sealing to improve the airtightness of your home to achieve the air-change rate target.
• Windows and doors, up to $5,000: Replace your doors, windows or sliding glass doors with ENERGY STAR® certified models.
• Thermostat, up to $50: Add a smart thermostat to help improve your comfort and save money on your energy bill (must be combined with another energy efficiency retrofit).
• Space and water heating, up to $5,000: Make the switch to more energy-efficient space heating or water heating equipment to save on your utility bill and reduce your carbon footprint.
• Renewable energy, up to $5,000: Install a solar photovoltaic system to convert sunlight energy into electricity.
• Resiliency measures, up to $2,625: Implement measures to protect your home and family from environmental damages (must be combined with another energy-efficiency retrofit).

In order to qualify, you must own the home as your primary residence and obtain a pre-retrofit evaluation. You must also have a good credit history, so cannot be in a consumer proposal, an orderly payment of debt program, or a bankruptcy or insolvency proceeding.

You can apply for a Canada Greener Homes Loan here.

What is the Oil to Heat Pump Affordability Program?

This program may be applicable for you, Joan. It provides up to $10,000 to convert your oil heating to a heat pump. If you live in Nova Scotia, Newfoundland and Labrador, or Prince Edward Island, the rebate is up to $15,000.

There is a catch, though. Your household income needs to be below the median after-tax household income for your province based on your household size. Read the details from Natural Resources Canada.

Other provincial programs

Quebec residents can participate in the Rénoclimat program.

Nova Scotia residents can participate in the Home Energy Assessment program.

What home improvements provide tax savings for 2024?

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. 

Multigenerational Home Renovation Tax Credit

The 2022 federal budget introduced a Multigenerational Home Renovation Tax Credit for up to $50,000 of renovations for adding a secondary unit to a home for an immediate or extended family member. The credit took effect on Jan. 1, 2023.

GST/HST New Housing Rebate & provincial new housing rebates

There is also a GST/HST New Housing Rebate and provincial new housing rebates for substantial renovations where more than 90% of a home is renovated. This generally requires that all or substantially all of the interior of a building, other than structural components, are removed or replaced. The rebate depends on the value of the home and the province where it is located.

Are maintenance fees tax deductible on a rental property?

Repairs and renovations can also provide tax savings each year for a rental property. They may be eligible to claim as current (tax-deductible) expenses or depreciated over time as capital expenses. Renovations also reduce the eventual capital gains tax payable for the sale of a rental property, cottage or a property used for a business. This may or may not be of interest to you, Joan. 

You have options

In summary, Joan, your renovation may not be eligible to claim on your tax return. But it may qualify for a Canada Greener Homes Loan or the Oil to Heat Pump Affordability Program. If you live in Quebec or Nova Scotia, their provincial programs may also apply.

Read more about personal income taxes in Canada:

• Can you file multiple years of income taxes together in Canada?
• How to avoid tax on severance pay in Canada
• How to have the most tax-efficient retirement income plan
• Self-employed? Here’s how to file taxes for a side hustle

About Jason Heath, CFP

Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell any financial products whatsoever.

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