$7,500 Home Renovation Tax Credit 2025 – How to Claim

Imagine making your home more comfortable, energy-efficient, and valuable while receiving a significant financial boost from the government. Canada’s reintroduced Home Renovation Tax Credit for 2025 is designed to do precisely that. This initiative offers homeowners a practical way to offset the costs of important upgrades, from replacing drafty windows to installing a new roof or adding accessibility features for aging family members.

By planning your renovations within the 2025 calendar year, you could be eligible for a refundable tax credit of up to $7,500. This program is not just about immediate savings; it’s an investment in your property’s long-term efficiency, safety, and market value. This guide will walk you through the eligibility rules, covered renovations, and the simple steps to claim your credit on your next tax return.

Home Renovation Tax Credit 2025: An Overview

The Canadian government has reintroduced the Home Renovation Tax Credit to encourage investments in safer, more sustainable, and efficient homes. This initiative provides financial support to homeowners while simultaneously boosting local construction industries and advancing national energy conservation goals.

• Maximum Credit: $7,500 (refundable)
• Eligible Period: Renovations must be completed between January 1, 2025, and December 31, 2025.
• Governing Authority: Canada Revenue Agency (CRA)
• Primary Goal: To offset the cost of renovations that improve energy efficiency, safety, or accessibility.

Eligibility Criteria

To qualify for the $7,500 credit, you and your property must meet the following requirements:

• Homeowner Status: You must own the property, and it must be your primary residence.
• Renovation Timeline: All eligible work must be completed within the 2025 calendar year.
• Contractor Requirements: Work must be performed by a licensed and arm’s-length contractor. DIY projects are typically not eligible.
• Eligible Expenses: The credit applies to specific types of renovations (see below). Keep all detailed receipts, invoices, and contracts as proof of payment and work completion.

Eligible vs. Ineligible Renovations

It’s crucial to know which home improvements qualify before you begin your projects.

Eligible Renovations (Examples):

• Energy Efficiency: New insulation, energy-efficient windows and doors, high-efficiency furnaces/boilers, solar panels.
• Accessibility Modifications: Wheelchair ramps, walk-in tubs, grab bars, stairlifts.
• Building Envelope Improvements: New roofing, siding, foundation waterproofing.
• System Upgrades: Electrical wiring updates, plumbing for water conservation.

❌ Ineligible Renovations (Examples):

• Routine maintenance (e.g., painting, cleaning).
• Luxury or aesthetic upgrades (e.g., swimming pools, hot tubs, new landscaping).
• Appliance purchases (unless integral to an eligible system upgrade).
• Furniture or decorative items.

How to Claim the Credit: A Step-by-Step Guide

The claim process is integrated with your annual tax return. Follow these steps to ensure a smooth application:

1. Complete Eligible Renovations: Ensure all work is done and fully paid for within the 2025 calendar year.
2. Gather & Organize Documentation: This is the most critical step. Collect all:
   • Itemized invoices and receipts from contractors.
   • Proof of payment (bank statements, cancelled checks).
   • Contracts that detail the work performed.
   • Manufacturer’s specifications for eligible energy-efficient products.
3. File Your 2025 Income Tax Return: In early 2026, you will file your tax return for the 2025 year.
4. Complete the Designated Form: The CRA will provide a specific schedule or form (e.g., Schedule 12) to report your renovation expenses. Attach this to your return.
5. Calculate Your Credit:
   • You can claim up to $20,000 in eligible expenses.
   • The credit is calculated at 15% of your expenses.
   • Maximum Credit: 15% of $20,000 = $7,500.
6. Keep Records: Retain all supporting documents for at least six years in case of a CRA review.

Payment Schedule and Timeline

The timing of your payment depends on how you file your tax return.

• If you file ELECTRONICALLY by April 30, 2026:
  • You can expect to receive your credit (via direct deposit) within 4 to 6 weeks.
• If you file a PAPER return:
  • The processing time is longer, typically 8 to 10 weeks.

Pro Tip: Set up direct deposit with the CRA for the fastest and most secure receipt of your funds.

Conclusion

The 2025 Home Renovation Tax Credit is a valuable opportunity for Canadian homeowners to invest in their properties while easing the financial burden of essential upgrades. By focusing on energy efficiency and accessibility, the credit supports both your family’s well-being and broader environmental goals. To maximize this benefit, ensure you keep meticulous records of all expenses and contracts. With careful planning and adherence to the CRA’s guidelines, you can successfully claim this credit and enjoy a more modern, efficient, and comfortable home.

Frequently Asked Questions