Your tax return: How to claim the home accessibility tax credit

           

If you’re renovating your home to make it more accessible, keep in mind that you can get a tax credit for the eligible expenses. The home accessibility tax credit (HATC) was introduced by the federal government, for the 2016 tax year, to help make homes safer and more accessible for people with disabilities (those eligible for the disability tax credit) and elderly people (age 65 or over).

What types of accessibility expenses can be claimed?

Let’s take a look at a fictitious couple to better understand what is eligible. Dr. Eleanor Giroux* is a family physician, and she and her husband, Stephen, are both in their late 50s. The couple had planned to retire early and travel extensively. Unfortunately, Stephen was recently diagnosed with ALS, or Lou Gehrig’s disease. They’re devastated by this diagnosis and are having to rethink their retirement plans.

In the shorter term, they will need to renovate their home to accommodate Stephen’s expected decline in mobility. They will likely need to widen their doorways for wheelchair passage, build a wheelchair ramp up to their front door, and install a walk-in bathtub and grip bars.

Either Eleanor or Stephen can claim the home accessibility tax credit. Because it’s a tax credit (rather than a tax deduction), it is worth the same in tax savings regardless of who makes the claim. It’s available to the qualifying individual (the person with the disability or the person who is over 65), the qualifying individual’s spouse or common-law partner, or another eligible individual.

The maximum claim in one year is $10,000

Eleanor and Stephen expect to spend about $15,000 on renovations. However, they can claim only $10,000 in eligible expenses in one year, which translates to $1,500 in federal tax savings. (Some provinces also offer a provincial tax credit.) They considered doing the renovations in two stages, over two tax years, so they could claim the whole $15,000, but they decided that time is of the essence.

Note that Eleanor and Stephen can claim this credit only if the renovated dwelling is their principal residence. If they were to move during the year, they would have two principal residences in one tax year — but that doesn’t mean they could claim $10,000 in accessibility renovations on each home. Their total eligible expenses cannot be more than $10,000 in a single tax year.

The government lists a number of expenses that can be claimed and ones that cannot. Essentially, you can claim for renovations that make it easier for the qualifying person to gain access to the dwelling and be mobile inside it, and for renovations that reduce the risk of harm to the person.

If you do the renovations yourself, you can claim the cost of building materials, fixtures, equipment rentals, building plans and permits. You cannot, however, claim the cost of labour or tools.

If you hire an electrician, plumber, carpenter or architect, you can claim those expenses.

Double up: Renovations can be medical expenses, too

Another good thing to know about Eleanor and Stephen’s renovation expenses is that they may also qualify as medical expenses. The same expenses, if qualified, can be claimed as a home accessibility tax credit and as medical expenses. Unlike for the home accessibility tax credit, there is no upper limit to medical expenses. For the 2019 tax year, you can claim a 15% federal non-refundable tax credit on qualifying medical expenses that are more than either $2,352 or 3% of your net income, whichever is less.

If you think you qualify, talk to a tax professional about claiming the home accessibility tax credit and eligible medical expenses. Be sure to take advantage of all the tax benefits available to you! 

For more information, read Tax Tips for Retired Physicians.

* This hypothetical case study is for illustrative purposes only and does not represent actual clients. Any resemblance to actual people or situations is purely coincidental.

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