As people get older, they often need to make modifications to their homes so they can keep living there. The New Brunswick government realizes the importance of these renovations, and to offset these costs, the province offers the Seniors’ Home Renovation Tax Credit. If you have any senior clients or clients who live with their senior relatives, you may want to talk with them about this credit.
To claim this credit, your client must be a New Brunswick resident, and be a senior or someone living with a senior relative. They must also make the renovations to their primary home. This includes homes they own or rent. That said, if a renter claims this credit, they must pay for the expenses on their own. They can’t be reimbursed by their landlord.
Additionally, if a landlord makes renovations for their senior tenants, they can’t claim this credit, but of course, they can claim these costs as business expenses. Luckily, in all cases, there are no income restrictions on this credit.
Which Renovations Qualify?
To qualify for this credit, the renovations must make life easier or safer for the senior. They can’t just improve the value of the home or change its look. For example, adding wheelchair ramps, stair lifts, and elevators to improve mobility inside the home are eligible expenses. Walk-in bathtubs, grab bars in the shower, and similar bathroom renovations also qualify. The renovations don’t have to be substantial.
Your clients can even claim this credit for relatively small changes such as putting in easy-to-use door locks or replacing door knobs with levers. Even the cost of adding more light to help someone with diminishing vision can qualify.
Basically, anything that makes the home safer or more accessible usually qualifies. Your clients can even claim expenses related to outside the home. For instance, if they replace a gravel driveway with a concrete driveway to make it more accessible, that may qualify.
In contrast, general maintenance, such as electrical repairs or putting in a new roof don’t count. Aesthetic improvements like painting the walls or planting flowers also don’t qualify. Additionally, the expenses have to be related to renovations. Your client can’t claim this credit for wheelchairs, medical monitoring equipment, or similar devices, but they may be able to count these expenses when claiming their medical tax credit. Unfortunately, your clients also can’t claim this credit on costs related to housekeeping, gardening, or other services around the house. Although the credit covers renovations that make the home safer, this doesn’t extend to home security. By extension, you can’t include security alarms or services when calculating this credit.
How Much Is the Credit?
The credit is worth 10% of up to $10,000 of eligible expenses. For example, if your client spends $200 putting in door levers that are easier for an arthritic hand to grab, they can claim a credit of $20.
Similarly, if your client spends $10,000 widening doorways so a wheelchair can pass through, they can claim a $1,000 credit. But if they spend an additional $5,000 putting in ramps, they can’t claim any extra because they’ve reached their maximum.
What About DIY Renovations?
If your client hires a professional, the eligible expenses include both labour and materials. But if your client does the work on their own, they can’t claim anything for the labour.
To explain, imagine a contractor comes in to modify your client’s kitchen and charges $9,000 for labour and expenses. In this case, your clients can report all those expenses and claim a $900 credit.
But say your client decides to do the work on their own. They buy $3,000 worth of supplies and spend a week doing the modifications. In this situation, even though your client dedicated their time and effort, they can’t make a claim on that. They can only base their claim on the $3,000 they actually spent, making their credit $300.
How Do You Claim the Credit?
You can claim this credit on your client’s income tax return for the year in which the expenses were incurred. Simply fill out Schedule NB(S12) New Brunswick Seniors’ Home Renovation Tax Credit and submit it with your client’s federal income tax return. This form is really straightforward. Basically, you list the date on the receipt or invoice, the name of the contractor or supplier, and any GST/HST paid. Then, you pop in a brief description of the renovation and its cost minus sales tax. Finally, you add up the expenses and multiply by 0.10.
You shouldn’t submit any receipts or invoices with the tax return, but let your clients know they need to save those documents in case of an audit.
If you’re representing a married couple, they can split the credit, but they can’t go over the $10,000 expense threshold. In other words, their total combined credit can’t exceed $1,000. If you have clients who want to make the most of this credit but need to spend more than $10,000, you may want to advise them to split the expenses over a longer time period. For instance, if they do $10,000 of renovations one year and $10,000 the next year, they can claim the full $1,000 credit each year.
Aging can be expensive in a lot of ways. If you have senior clients or clients who live with their senior relatives, you may want to talk with them about this credit or other programs that can help them save money and preserve their independence.