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Need to Fund Home Accessibility Renos? Here’s Help

Did you know that if you’re a senior or have a disability, you can get a tax credit for renovations to make your home accessible? As seen in REW.ca

ist2_9976811-happy-senior-woman-holding-a-bowl-full-of-vegetablesThe BC seniors home renovation tax credit assists individuals who are 65 years of age or older with the cost of certain permanent home renovations to improve accessibility or help the senior be more functional or mobile at home.

This program was introduced on April 1, 2012, therefore the renovation expenses must happen on or after this date. Any expenses incurred under an agreement entered prior to this date do not qualify.

When the BC government released its budget last month, it announced an amendment to the senior’s home renovation tax credit, extending the program to individuals that may be eligible to claim the disability tax credit and to the family members living with those individuals. (Learn about the eligibility to claim the disability tax credit here.)

In order to claim the credit for the year if on the last day of the tax year, the individual must be a resident of BC and a senior or a family member living with a senior.

The renovation must be completed to the applicant’s principal residence while the credit can be shared between eligible residents of the home to a maximum amount of the credit. The maximum amount of the credit is $1,000 per tax year and is calculated as 10 per cent of the qualified renovation expense to a maximum of $10,000 in expenses. This credit is a refundable tax credit, which means that if the credit is higher than the taxes the applicant owes, they will receive the difference as a refund.

The renovations or alterations that qualify must assist the senior with an impairment by improving access to the property; improving mobility and function within the property; or reduce the risk of harm within the property.

The following are some examples of renovations or alterations that qualify:

  • Res-Custom-Home-Solutions-1Lowering existing counters/cabinets or installing adjustable ones
  • Pull-out shelves under counter to enable work from a seated position
  • Doorways that are widened for passage, and swing-clear hinges on doors to widen doorways
  • Door locks that are easier to operate
  • Installing non-slip flooring or to allow the use of walkers
  • Turning bathtubs into walk-ins or showers into wheel-in
  • Grab bars and related reinforcements around the toilet, shower and tub
  • Hand rails in hallways
  • Light fixtures throughout the home and exterior entrances
  • Motion-activated lighting
  • Light switches and electrical outlets placed in accessible locations
  • Taps such as hands-free, relocation to front or side for easier access
  • Hand-held showers on adjustable rods or high-low mounting brackets
  • Lever handles on doors and taps, instead of knobs
  • Alterations of sinks to allow use from a seated position (and insulation of any hot-water pipes)
  • Increasing the height of the toilets
  • General renovation costs necessary to enable access for seniors to first floor or secondary suites
  • Wheelchair ramps, stair/wheelchair lifts and elevators

The following are some examples of renovations or alterations that don’t qualify:

  • All appliances, including those with front-located controls, side-swing ovens, etc.
  • Installation of regular flooring
  • General maintenance including plumbing and electrical repairs
  • Installation of heating or air-conditioning systems
  • Home medical monitoring equipment
  • Home security or any anti-burglary equipment
  • Roof repairs
  • Installation of windows
  • Any services to such as home care services, housekeeping services, outdoor maintenance and gardening services and security or medical monitoring services
  • Aesthetic enhancements such as landscaping or redecorating
  • Fire extinguishers, smoke alarms or carbon monoxide detectors
  • Home entertainment electronics
  • Insulation replacement
  • Vehicles adapted for people with mobility limitations
  • Walkers and wheelchairs

img_2111How to Claim the Credit

The credit can be claimed when the applicant files their personal income tax return for 2012 and future years. Schedule BC(S12) must be completed on the tax return and put the amount that was spent on the eligible renovations beside box 6048 and form BC(479).

It is important to retain documentation to support the claim, including receipts from suppliers and contractors. If work has been performed by a family member, receipts for labour and materials must have a GST number.

If a receipt was received at the end of the calendar year and payed it in the following calendar year, the credit is to be claimed for the taxation year based on when the invoiced was received.

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Exploring the Benefits of Reverse Mortgages

Most Canadian seniors have 80 per cent of assets tied up in their house – and they can access that money in retirement. As seen in REW.ca 

Perhaps you have a friend or family member who has been dreaming about this moment throughout their working life. That dream is to retire and have the time and money to travel, fix up the family home, indulge in hobbies, visit grandchildren, spend weekends at the cottage, help their children buy a home, pay off debts, help their grandchildren with tuition fees, and most importantly, not have to worry about money.

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But now that they are 55 or older, they may have been caught off guard by the expenses associated with retirement, such asproperty taxes, rising energy and utility expenses, and the overall cost of living, which seems to get higher every year. Sure, they have their pension income, but it may not be enough to make ends meet. Most Canadian seniors have 80 per cent of their assets tied up in their house. But accessing that equity can be difficult. Most banks won’t give them a mortgage because they don’t have enough income to make monthly payments.

So what are the options?

Well, they could downsize and sell their house. But isn’t that where they always dreamed they would spend your retirement? Leaving the home where they raised their family, put down roots and made lifelong friends would be heartbreaking. Besides, selling and moving can be very expensive once they have paid real estate fees, moving expenses, legal fees and so on. There’s got to be a better solution than leaving their family home.

There is a better solution for many seniors, and that’s a reverse mortgage. A reverse mortgage is a specialized financial product for people aged 55 and over, who own their own home. It lets them stay in their home while benefiting from the value they have built up in that property over the years. Compared with a regular mortgage, a reverse mortgage can offer substantial monthly cash savings, so they have all the income they need to live the retirement of their dreams.

Let’s explore the benefits of a reverse mortgage.

Regular mortgages require you to pay a lender – a reverse mortgage pays you:

If you and your spouse are 55 or older and you own your home as your principal residence, you may be eligible to receive up to 40 per cent of your home’s current appraised value in cash. The specific amount you will receive is based on your age, your spouse’s age, the location and type of home you have, and your home’s current appraised value. No matter how much you receive, you never have to make monthly principal or interest payments (until you move), so you get the money you need without reducing your cash flow.

seniors fitnessThere are no income, asset, employment or credit requirements:

Since the amount you receive is secured against your home, qualifying is easy and hassle-free – even if you are living on a very limited retirement income. You can receive the money whichever way works best for your lifestyle With a reverse mortgage, you can choose a single lump-sum payment or ongoing monthly, quarterly, semi-annual or annual income.You can even choose a lump sum to begin with, followed by ongoing advances over time.

A reverse mortgage can be used to clear up all your remaining debts:

Maybe you still have a mortgage remaining on your house and the payments are cutting into your lifestyle. Maybe you have monthly credit card bills piling up. A reverse mortgage can be the ideal solution. In most cases, you can use the funds to eliminate mortgage payments and credit card debts, and still have enough left over so you can enjoy life more and not have to worry about money. Your income taxes and pension are unaffected As a retired person, one of your major concerns is how much you will be paying in taxes each year, since that can really affect your cash flow. Fortunately, the money you receive from a reverse mortgage isn’t considered income – even if it’s invested in an account or annuity with monthly withdrawals. This is because the home equity you are accessing has already been taxed, since you purchased your home with after-tax dollars. Not only don’t you have to pay taxes on your reverse mortgage proceeds, they won’t bump you up into the next tax bracket. And since they’re not considered income, they won’t affect your Old Age Security (OAS) or Guaranteed Income Supplement (GIS) payments.

Your home remains your home:

You will never be asked to move or sell your home to repay your reverse mortgage, as long as you maintain the property and stay up-to-date with property taxes, fire insurance and strata fees. Your equity and estate is fully protected since the reverse mortgage amount can never exceed your home value. Sure, the equity in your home will decrease over the years as you receive payments, but your home’s value could increase even more quickly over the same period. Generally, 99 per cent of homeowners have money left over when their reverse mortgage is finally repaid (when you move or die). On average, the amount left over is 50 per cent of the value of the home when it’s sold. The interest on your reverse mortgage can sometimes be tax deductible If you use the money you receive to make non-registered investments such as GICs and mutual funds, the interest costs on your reverse mortgage can be written off at tax time. This can help offset the taxes you owe on your income, RRIF or RRSP withdrawals.

AssistedLivingNewMortgage experts like ourselves can introduce clients to all the benefits of a reverse mortgage. However, since we are not tied to any one lender or type of product, before recommending a reverse mortgage, we will do a thorough analysis of our clients’ situation, needs and goals. Only then will we make an unbiased recommendation about which product is right for them.

In most cases, that will be a reverse mortgage. But as mortgage experts, we have access to innovative lines of credit and other home lending products that may fit their specific needs even better.