Tax Credits

This is the second year that the TSFA has been available as an investment vehicle and yet only 1/3 of Candians have taken advantage of it. It is a great way to shelter your long term investments. There is no immediate gratification since you do not get a tax break on the money you invest (it is after tax dollars) but any monies you make on your investment are exempt from any taxes in the future. Can you imagine what that would mean in 20 years if your investments do well!! Under the guidelines, you can contribute up to $5000 per year and withdraw money at any time without any tax on the amount you put in or the profit you make.

A few words of caution though, if you remove any money you have invested in the TSFA account, you can not put it back until the next calendar year without a penalty.

Secondly if you transfer money from one TFSA account to another financial institution within the same calandar year it is considered an additional contribution or an over contribution and you will be penalized.

So TFSAs are a fanatastic financial tool that provide a great amount of tax relief in later years, but they are not a good idea if you are planning to use it as an emergency fund or an everday account.

TSFA’s are a great investment vehicle but make sure you know the rules!

Home Renovations Improve Resale ValueTo stimulate economic growth and encourage Canadians to invest in improvements to their principal residences. Budget 2009 has proposed a temporary
Home Renovation Tax Credit (HRTC).

Individuals will be able to claim a 15-per-cent non-refundable tax credit for eligible expenditures made in respect of eligible dwellings.
The credit will apply to expenditures in excess of $1,000, but not more than $10,000, resulting in a maximum credit of $1,350 ($9,000 x 15%).

The credit will apply only to the 2009 taxation year. Expenditures for work performed, or goods acquired, after January 27, 2009 and before February 1, 2010, will be eligible for the credit.
Eligibility for the HRTC will be family-based. Family members will be subject to a single limit based on their pooled expenditures. Two or more families that share ownership of an eligible dwelling will each be eligible for their own credit. Each family’s credit will be determined by their
respective eligible expenditures in excess of $1,000, but not more than $10,000.

Eligible Expenditures

Expenditures will qualify for the HRTC if they are incurred in relation to a renovation or alteration of an eligible dwelling (including land that forms part of the eligible dwelling)
provided that the renovation or alteration is of an enduring nature and is integral to the eligible dwelling. Such expenditures would include the cost of labour and professional services,
building materials, fixtures, equipment rentals, and permits.

The following expenditures will not be eligible for the credit:

  • The cost of routine repairs and maintenance normally performed on an annual or more frequent basis.
  • Expenditures for appliances and audio-visual electronics.
  • Financing costs associated with a renovation (e.g. mortgage interest costs).

Alterations or other items, such as furniture or draperies, and other indirect expenditures for items that retain a value independent of the renovation, such as the purchase of construction
equipment (e.g. tools) will not be considered integral to the dwelling and therefore will not qualify for the credit.

Remember, the money invested in improving your home will not always translate into an equivalent return in the selling price of your home.
Careful planning is important if you want to increase the salability of your home and make a profit from your renovations!
Please be sure to visit the selling tips section of my website to find out which renovations provide the most return on investment.