Canada Home Accessibility Tax Credit (HATC): How to Qualify?

Modifying homes for greater safety, mobility, and independence can be costly for seniors and the disabled. The Home Accessibility Tax Credit (HATC) brings crucial tax relief to the table, enabling aging people or those with mobility limitations to continue living comfortably and independently in their own homes longer. Anyone eligible for this tax incentive can recoup up to $3,000 annually from the Federal Government to put towards necessary home modifications. It’s an invaluable program that helps bridge financial gaps so crucial life-enhancing changes don’t fall out of reach.

What is the Home Accessibility Tax Credit (HATC)?

The Home Accessibility Tax Credit (HATC) is a non-refundable tax credit introduced in Canada’s 2015 Federal Budget. Its purpose is to help offset the costs Canadians, especially seniors and persons with disabilities, may face when completing vital home renovations to enhance accessibility and safety. Thus, they can continue living in their homes instead of moving to costlier and potentially less desirable long-term care facilities.

There are specific requirements around who qualifies for the HATC and what types of renovations and expenses are eligible. The following sections will cover those key criteria in detail.

Who Qualifies for the HATC?

There are two main categories of eligibility: qualifying individuals and the wider network of family and relatives who can claim HATC on their behalf. This ensures that vulnerable populations who need these home modifications the most can benefit from this tax credit, even if they are not homeowners themselves.

Qualifying Individuals

To qualify directly in your own right, you must either:

• Be 65 years of age or older by December 31st of the tax year in question; or
• Be approved for and eligible to claim the federal Disability Tax Credit for disabled persons in Canada

If you meet either criterion, you would be designated as a “qualifying individual” and entitled to reap the benefits of the HATC to improve accessibility in your principal residence.

Eligible Individuals Who Can Claim

In addition to qualifying individuals claiming the HATC directly, HATC also opens the door for family members and relatives providing care and financial assistance to tap into this tax relief.

Eligible individuals include:

• Spouses or common-law partners of qualifying individuals (if they reside with the qualifying senior or disabled person)
• Certain Relatives – Parents, grandparents, children, grandchildren, siblings, aunts, uncles, nieces and nephews (if they financially support the qualifying individual via existing tax credits/benefits).

Some examples of eligible relatives:

• A daughter who claims the Canada Caregiver Amount for her mother, who has a disability.
• A grandson who financially supports his disabled grandmother and claims an amount for an eligible dependant.

So, if you are a direct relative of a senior or person with disabilities AND you play a role in supporting or caring for that individual AND you qualify for and claim certain taxpayer amounts and benefits, you can tap into HATC even though the home isn’t yours.

What Types of Homes Qualify for The HATC?

In order for home renovation expenses to qualify for HATC, the dwelling itself, Eligible dwellings, such as houses, apartments, condominiums, co-ops, mobile homes, must meet the following criteria:

The home must be in Canada, either owned or rented, and must be owned, either solely or jointly, by the qualifying individual OR by the eligible individual making a claim on their behalf.

The qualifying person must ordinarily inhabit the home for it to meet eligibility. If they move during the tax year, multiple principal residences could potentially qualify within the same year.

Additionally:

• The immediately surrounding land of up to 1/2 hectare forms part of the “home” definition for HATC purposes
• Qualifying individuals can only have ONE eligible principal dwelling at a time that would meet occupancy requirements

Eligible Renovations for HATC

Not all home remodels qualify for HATC. The key requirement is that renovations must help to enhance accessibility or mobility within the home environment. Some examples of eligible home modifications include:

• Bathroom Modifications like Walk-in bathtubs or showers with grab bars, Wheelchair-accessible sinks and countertops, Raised toilets or toilet safety frames
• Kitchen Modification like Lowered countertops, Adjustable shelving and cabinets, Wheelchair-accessible appliances
• Structural Modifications like Ramps for external entrances, Widening hallways and doorways, Installation of residential elevators or stair lifts
• Safety Enhancements like Grab bars, railings and non-slip flooring, Improved lighting features, Wheelchair-accessible alerts for smoke/CO detectors
• Smart Home Technology like Automated door, window, or lighting controls, Voice-activated speaker systems, Video monitoring for safety

Major home repairs like renovating kitchens and bathrooms to support independence and mobility are clear examples. But less obvious qualifying changes like installing adequate lighting to prevent falls or voice-activated smart features to assist with tasks also qualify. The key deciding factors are that renovation must be lasting in nature, not a temporary adjustment and improvement should directly promote accessibility and safety within the home based on individual needs.

Modifications that are NOT eligible for HATC include:

• Routine maintenance and repairs
• Installations purely to improve home enjoyment or resale value
• Housekeeping, snow removal, security and landscaping services

Eligible Expenses Covered Under the HATC

Assuming prerequisite eligibility criteria are met, what specific costs associated with home renovations qualify under the Home Accessibility Tax Credit? Consider these scenarios.

Renovation performed by Homeowners

If you take on the renovations yourself, some costs that qualify include:

• Building materials
• Permanent home fixtures added
• Equipment and tools rented for the project
• Fees paid for required building permits

Note that the value of YOUR own labour and any tools or assets you already own do not qualify. Only documented expenses would be eligible.

Renovation performed by Family members

To qualify for related expenses under HATC, family members completing renovations must meet a key requirement:

They MUST be registered to charge and remit Goods & Services Tax (GST) / Harmonized Sales Tax (HST). Assuming GST or HST registration, the costs of hiring a family as a contractor could become eligible.

Work done by Professionals

Any construction labour costs associated with hiring professional contractors would meet eligibility, assuming standard compliance guidelines are followed (details below). Some best practices when hiring contractors for qualifying renovations include:

• Obtaining multiple quotes for comparison
• Ensuring proper licensing, insurance, bonding, and Workplace Safety & Insurance Board (WSIB) coverage
• Checking references and reviews
• Paying in installments tied directly to project milestones

This protects homeowners financially and legally throughout the renovation process while allowing costs to qualify for HATC.

Who Qualifies for the HATC?

While the eligible expense criteria mainly focus on building materials, fixtures, equipment, and professional labour costs, various other expenses do NOT qualify under the HATC guidelines:

• Annual or routine maintenance and repairs
• Financing costs and interest charges
• Services like housekeeping, gardening, and security systems
• Renovations focused more on home value vs. accessibility
• Purchases of household appliances or furnishings

Documentation proving payment of eligible expenses such as agreements, invoices, and receipts, is required to qualify for HATC tax relief.

How to Claim the HATC?

Now that we’ve covered the fundamentals around who and what qualify for HATC, let’s discuss claim amounts and the financial tax credit individuals can tap into.

How Much Can You Claim Under the HATC?

Since 2022, eligible claimants can submit up to $20,000 in qualifying home renovation expenses each year to qualify for the Home Accessibility Tax Credit. This increased from the prior $10,000 maximum imposed in years before 2022.

This means each qualifying individual could receive a maximum annual HATC tax credit of $3,000 ($20,000 * 15%) from the Federal Government.

If there are two eligible individuals living in the same modified dwelling (for example, a senior couple aged 68 and 72), the maximum total HATC they could recoup between them would equate to $6,000 annually.

Of course, amounts claimed and credits received align directly with actual expenses incurred. We’re simply illustrating the current maximum thresholds in place. Not everyone would hit that ceiling with their home renovation projects.

Calculating Exact HATC Credit Amounts

When planning potential renovations, first determine estimated costs and then calculate projected HATC credits accordingly based on expenses.

HATC Calculation Formula:

Total Eligible Expenses x 15% = Estimated Non-Refundable Federal Tax Credit

Examples:

• A $12,640 renovation x 15% = $1,896 HATC tax credit
• $8,100 in eligible expenses x 15% = $1,215 HATC claim amount

Analyze your budget, explore options to finance larger projects that optimize credits, and strategize the best fiscal approach. An accounting professional can help ensure you maximize tax relief.

Step-by-Step Instructions For Claiming the HATC

Claiming the Home Accessibility Tax Credit requires reporting eligible renovation expenses when filing your annual personal tax return to the Canada Revenue Agency (CRA). Let’s break down the process:

Step 1: Submit Receipts and Track Expenses

As home improvements wrap up, request and retain all receipts plus additional documentation that proves payment. Track expenses in a dedicated HATC folder or spreadsheet through the tax year.

Step 2: Complete the Federal Worksheet

When tax season rolls around, grab your records and fill out “Chart B” for Line 31285 on Form T2201 detailing accessibility renovation expenses.

The total amount is limited to the $20,000 annual maximum per qualifying individual.

Step 3: Transfer Amount to Line 31285 on Tax Return

Next, complete your standard tax return form up to Line 31285. Then, take the total HATC amount from your Federal Worksheet and input it on Line 31285. Continue completing the remaining sections.

That’s it! By reporting eligible expenses specifically on Line 31285, you apply for tax relief under the Home Accessibility Tax Credit.

Does the HATC Apply With Other Credits?

An advantageous aspect of the Home Accessibility Tax Credit is that the amount claimed does NOT reduce or offset any other tax credits or benefits you receive. HATC enhances total credits due!

For ultimate tax relief, many individuals coordinate and “stack” HATC with other special credits, common ones being:

Medical Expense Tax Credit (METC) – Since accessibility-based home renovations often equate to medical necessities too, many expenses qualify for both HATC and METC. Claim full amounts under both programs.

Disability Tax Credit – If eligible for the Disability Amount, further tax relief applies on top of HATC.

Canada Caregiver Credit – Eligible family members caring for qualifying seniors or disabled persons can qualify for this alongside HATC.

Explore other incentives for homebuyers in Canada:

• Home Buyers’ Plan (HBP)
• First Home Savings Account (FHSA

FAQs about Home Accessibility Tax Credit

Final Thoughts

As we or our loved ones age or acquire impairments, home environments enabling greater function and quality of life become essential. Tap into every available resource like the Home Accessibility Tax Credit to ease the process.

With careful planning guided by BestMO experts, leverage HATC to achieve your necessary home renovation goals, reduce associated costs, and retain independence longer term while staying safely in your home.

Article Sources

1. Goverment of Canada