In recent months governments around the world have announced various programs to stimulate their economies. Most of these stimulus projects are large-scale infrastructure developments – roads, bridges and rapid transit lines. Other programs are found closer to home. Literally!

The federal Home Renovation Tax Credit (HRTC) is one way that homeowners can directly benefit from the government’s attempt to stimulate the Canadian economy. It comes in the form of a “tax credit” on home renovations and improvements.  More than 4.5 million Canadian families are expected to benefit. Should you be one of them?

There are some things you need to know. First the HRTC is designed as a “family-based” tax deduction and it is for principal residences only. It is a one-time-only program that applies to home renovations and improvements undertaken after January 27, 2009, and before February 1, 2010. A wide range of things can be covered such as fixing a roof or getting a new carpet, installing a more energy-efficient hot water tank or fireplace, or even repairing the swimming pool. The criteria are quite broad – as long the work amounts to an “enduring” improvement to your property. Unfortunately it won’t pay for that big screen TV you’ve been coveting!

Here are the basic numbers: Every Canadian family can deduct 15% of eligible expenditures (the first $1,000 you spend doesn’t qualify) to a maximum of a $1,350 credit.  To be eligible for the maximum credit you would have to spend $10,000. The costs of labor and professional services, building materials, fixtures, rentals, and permits can all be included.

The HRTC makes most sense if you were already wanting or needing to make the renovations to your home. Although by participating in the program you are stimulating the Canadian economy, the expenditures should still make sense for your household budget. This tax credit is just an added bonus.

To learn more, check out Canada Revenue Agency. – Karin Mizgala

Karin Mizgala is a Vancouver-based fee-for-service financial planner with an MBA and a degree in psychology. She’s the President of LifeDesign Financial and co-founder of the Women’s Financial Learning Centre.