The Home Renovation Tax Credit and Condominiums

The 2009 Tax forms are out and instructions on claiming the credit for the new Home Renovation Tax Credit can be found on page 38 of the 2009 General Income Tax and Benefit Guide. To begin, you list your expenses on Schedule 12. For condominium owners, this may include amounts spent by the Corporation, in addition to your personal expenditures.

One of the qualifying conditions for condominium owners is if "the condominium has notified you in writing of your share of the expenses". This places the onus on the Corporation to calculate and report to the owners their share of eligible expenses.

My recommendation to my condominium boards is to calculate the eligible expenses, copy all the necessary invoices, then to advise each homeowner of their shared based on the same proportionate percentages used to calculate their common element fees, and include copies of the invoices.

There has been some pondering over how to distribute the eligible expenses for those condominium units that have changed ownership during the year. In my opinion, this can be accomplished by the following method:

The eligible period for expenses is after January 27, 2009 and before February 1, 2010, this is a total of 369 days. If you divide the total expenses by the number of eligible days, then multiply that number by the days an owner was in possession of the unit, that should be the amount they are eligible to claim.

For example, for a condominium spent $9,000 on repairs and an owner whose proportionate share is 3.687% of the total expenses purchased and closed their unit on November 1, 2009, the calculation could be as follows:

$9,000 x 3.687% = $331.83 / 369 = $0.90 x 92 = $82.73 (92 being the number of days from November 1, 2009 to January 31, 2010). This owner would be eligible to claim $82.73 towards the Home Renovation Tax Credit.

In the absence of clear direction from the Canada Revenue Agency on how to deal with the issue of unit sales, this solution is clear and, in my opinion, is the most fair way of distributing the credit.