Claiming Home Renovations on Your Taxes: What the CRA Allows

In most cases you cannot claim home renovations on your taxes when you live in the home. A kitchen, bathroom or basement renovation on your own house is a personal cost, not a deduction. It can still matter later, because improvements add to the cost of your home, and some credits cover accessibility work and secondary suites for family. Rentals, home offices and quick resales follow different rules.

Can you claim home renovations on taxes if you live there?

Usually no. When you renovate the home you live in, the cost is a personal expense. There is no line on your return to deduct a new kitchen, a bathroom remodel or a finished basement against your income.

Three situations change that: a federal or Ontario credit aimed at a specific kind of renovation, part of the home used to earn income, and a rental unit. Each has its own rules, covered below. This post is general information drawn from Canada Revenue Agency (CRA) and Ontario pages, not personal tax advice, so confirm your case with an accountant or the CRA.

Repair or capital improvement: how the CRA draws the line

The CRA separates current expenses from capital expenses. A current expense is a repair or upkeep cost that restores something. A capital expense gives a lasting benefit or improves the property beyond its original condition. Its rental-property guidance uses four tests:

• Lasting benefit. The CRA's example: vinyl siding on a wooden house is capital, while painting the exterior is current.
• Restore or improve. Repairing wooden steps restores them. Replacing them with concrete steps improves the property.
• Part or separate asset. Replacing a part to repair a property is usually current. Replacing a separate asset, such as buying a refrigerator, is capital.
• Size of the cost. The larger the cost compared with the property's value, the more likely it is capital. A big one-time bill for overdue ordinary maintenance can still be current.

The edge cases are where an accountant earns their fee. The CRA also says that renovating an older building you bought to make it suitable to rent is a capital expense.

Is a kitchen, bathroom or basement renovation tax deductible?

On your own home, no for all three. On a rental property, a full renovation is normally capital, so you do not deduct the whole cost in one year. You claim capital cost allowance (CCA) over several years, while minor repairs and maintenance can be deducted as current expenses. The CRA also says you cannot deduct the value of your own labour.

That answers whether a bathroom renovation is a capital improvement. A remodel that improves the room beyond its original condition usually is. Fixing a leak or swapping a worn part for a like-for-like one usually is not. A basement unit built to rent works the same way, since the cost of creating the rental space is generally capital.

If the basement suite is for family, look at the credits below. Our guides to basement suite grants in Waterloo Region and financing a basement renovation cover other ways to offset the cost.

Home office and self-employment: what a renovation can and cannot do

Employees who work from home can claim some workspace costs, but not renovations. The CRA's examples of capital costs you cannot claim include changing a furnace, changing a window or improving the flooring of a room. Maintenance and minor repairs can be claimed for the workspace share only. Check the CRA's home office page for the method and conditions that apply to your year.

Self-employed people use a separate business-use-of-home calculation. The space must be your main place of business, or used only to earn business income and regularly to meet clients, customers or patients. Expenses are prorated by space or time, and they cannot create or increase a business loss. Claiming CCA on the business part of your home brings capital gain and recapture rules into play if you sell later, so speak to an accountant before you claim it.

Credits that may apply to accessibility work and secondary suites

Three credits reach renovation work in specific cases. The amounts below come from the CRA and Ontario pages for the years they list, which is 2025 for the federal credits. Limits change by year, so read the current page before you rely on a figure.

• Home Accessibility Tax Credit (federal). A non-refundable credit for a qualifying individual who is 65 or older or eligible for the disability tax credit. The CRA lists up to 20,000 dollars of eligible expenses for 2025, claimed on line 31285. The work must be enduring, part of the home, and improve access or mobility or reduce the risk of harm. Materials, fixtures, permits, building plans and professional labour can count. Routine maintenance, appliances and financing costs do not.
• Multigenerational Home Renovation Tax Credit (federal). A refundable credit for renovations that create a self-contained secondary unit so a senior or an adult eligible for the disability tax credit can live with a qualifying relative. The CRA lists 14.5 percent of up to 50,000 dollars of qualifying expenses, to a maximum of 7,250 dollars, claimed on line 45355. Your own labour and tools do not count, and costs need receipts.
• Ontario Seniors Care at Home Tax Credit. A refundable credit for eligible medical expenses of people who turned 70 or older in the year, or whose spouse or partner did. Eligible expenses can include renovation or construction that improves mobility, access or functioning in the home because of a severe and prolonged impairment. Ontario lists up to 25 percent of up to 6,000 dollars, a maximum credit of 1,500 dollars, reduced as family net income rises above 35,000 dollars and gone by 65,000 dollars. It is claimed on form ON479.

Check how these credits combine before you plan, because the same cost may not qualify twice. If a relative does paid work for you, the CRA pages say that work counts only if they are registered for GST/HST. Our accessible bathroom guide covers the design side of this kind of work.

Selling later: how renovations affect the tax on your home

Renovations give no deduction now, but they can matter at sale. The CRA's capital gains guide says your adjusted cost base includes capital expenditures such as additions and improvements, while current expenses such as maintenance and repairs cannot be added.

For most owners, the principal residence exemption means no tax on the gain when the home was your principal residence for all the years you owned it, or all but one. So a higher cost base rarely changes the bill. It matters more when only part of a gain is exempt, and an accountant can tell you whether that applies.

Two cautions. You must report the sale and designate the home as your principal residence on Schedule 3, with Form T2091(IND). And if you renovate and sell a home you owned for fewer than 365 consecutive days, the gain is generally treated as business income, with exceptions for certain life events. Planning a kitchen update before a sale? Our kitchen renovation return guide covers the resale side.

Records to keep for any renovation

Good paperwork is the difference between a claim you can support and one you cannot. Keep:

• The signed quote or contract, with the scope split by item.
• Invoices and receipts showing dates, what was done and any GST/HST.
• Proof of payment, such as bank or card records.
• Permits and inspection records.
• Dated before and after photos.
• Your purchase and sale documents for the home.
• A simple log that marks each cost as a repair or an improvement.

The CRA says you do not send these with your return, but you should keep them in case it asks. Many owners keep renovation records for as long as they own the home, since improvements can add to the cost base. D&D Interior Services provides a free written quote that separates visible finishes from plumbing, electrical and structural work, which makes it easier to see what each part of a bill was for. See our kitchen renovation service if you are planning one.

Renovation tax questions homeowners ask

Is home renovation tax deductible in Canada?

Not on the home you live in. It is a personal cost. Rental owners can deduct repairs and maintenance as current expenses, and claim capital cost allowance over several years on improvements. Specific credits exist for accessibility work and secondary suites for family. Confirm your situation with an accountant or the CRA.

Is a bathroom renovation a capital improvement?

A remodel that improves the bathroom beyond its original condition, such as a new layout, better fixtures or a new shower, is usually capital. Repairs that restore it, like fixing a leak or replacing a worn part like for like, are usually current. The CRA's tests look at lasting benefit, condition and cost.

Is a basement renovation tax deductible?

For your own use, no. If you finish it as a rental unit, the cost is generally capital, claimed through capital cost allowance over time. If it creates a self-contained secondary unit for a senior or an adult eligible for the disability tax credit to live with a relative, the multigenerational credit may apply.

Is there a home renovation tax credit in Ontario?

The Ontario credit that reaches renovation work is the Ontario Seniors Care at Home Tax Credit, for people 70 and older with qualifying medical expenses. Federal credits cover accessibility and multigenerational renovations. Programs change often, so check ontario.ca and the CRA before you plan around one.

Can I claim a kitchen renovation if I work from home?

As an employee, no. The CRA treats renovations and improvements such as new flooring as capital costs you cannot claim for a home workspace. Self-employed people can claim a business share of some home costs, with limits, and capital cost allowance has consequences when you sell. Ask an accountant first.

Devon Moore, Operations Lead Co-Founder & Operations Lead — D&D Interior Services

Devon Moore is the co-founder and Operations Lead at D&D Interior Services, delivering kitchen renovations, bathroom renovations, flooring, and interior upgrades across Waterloo Region.