What are the tax implications of a kitchen renovation in New Brunswick?

Kitchen renovations in New Brunswick are subject to 15% HST on both labour and materials, and unlike some provinces, NB does not currently offer a provincial renovation tax credit for general kitchen upgrades. Understanding the tax landscape before you start helps you budget accurately and take advantage of any available savings.

The Harmonized Sales Tax of 15 percent (5% federal GST plus 10% provincial) applies to all renovation labour and materials in New Brunswick. On a $40,000 kitchen renovation, that adds $6,000 in taxes, bringing the actual cost to $46,000. This is one of the highest combined sales tax rates in Canada and is an important factor in your budgeting. All legitimate contractors will charge HST and provide receipts. Be cautious of any contractor offering a cash discount to avoid HST, as this is tax evasion, it voids any warranty or liability protection, and it signals the contractor may not carry proper insurance or WorkSafeNB coverage.

There is a federal GST/HST New Housing Rebate available if your renovation is classified as a substantial renovation, meaning you have gutted and rebuilt the interior to the point where the home is essentially new. A standard kitchen renovation, even a high-end gut renovation, typically does not qualify on its own because the rebate requires that at least 90 percent of the home's interior has been substantially renovated. If your kitchen is part of a whole-house renovation, consult your accountant about eligibility for the rebate, which can return a portion of the federal GST component.

When Renovations Have Tax Benefits

If you work from home and have a dedicated home office, and your kitchen renovation includes changes to a space that qualifies as a workspace, a portion of the costs may be deductible as a business expense. This is a niche situation and requires proper documentation and guidance from a tax professional.

For rental properties, kitchen renovations are treated as capital improvements rather than current expenses, meaning you cannot deduct the full cost in the year of renovation. Instead, the cost is added to the property's adjusted cost base and depreciated over time using the Capital Cost Allowance (CCA) system. This reduces your taxable capital gain when you eventually sell the property. Keep all receipts, invoices, and before-and-after photos for your records.

The federal Canada Greener Homes initiative previously offered rebates for certain energy-efficient home upgrades, though kitchen-specific items were limited. ENERGY STAR-rated appliances and certain insulation improvements done during a kitchen renovation that involves exterior walls may qualify for current or future programs. Check Natural Resources Canada for the latest available programs.

For homeowners aged 65 and older or those with disabilities, the federal Home Accessibility Tax Credit allows a non-refundable tax credit on up to $20,000 of eligible renovation expenses per year. Kitchen modifications like lowering countertops for wheelchair access, installing lever-handle faucets, improving lighting, or widening doorways for mobility aids can qualify.

Keep detailed records of every expense including contractor invoices, material receipts, and permit fees. Even if no immediate tax benefit applies, these records establish the adjusted cost base of your home and reduce capital gains tax if the property is ever sold as a non-primary residence. For specific tax advice about your situation, consult a New Brunswick accountant or tax professional.

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Looking for experienced contractors? The New Brunswick Construction Network connects homeowners with qualified professionals:

• Thirty Four Renovations
• Gionetterenovations