Are home energy rebates taxable in Canada?

The short answer for homeowners (principal residence)

When you improve the home you live in, you aren’t earning income from it, and the upgrade isn’t a deductible expense. A rebate on that upgrade generally reduces your out-of-pocket cost. There is usually nothing to report, and nothing to deduct.

That covers the common cases: a heat pump rebate from Home Renovation Savings, an insulation grant from Rénoclimat, or free upgrades from an income-qualified program. The same logic applies to a point-of-sale discount, such as B.C.’s PST exemption on heat pumps, which is tax you don’t pay.

Rental properties and the government assistance rules

The CRA’s rental income guide (T4036) is clear about grants, subsidies and rebates for rental property. You subtract the rebate from the expense it relates to. If it helped you buy depreciable property, such as a heat pump, you subtract it from the property’s capital cost before claiming capital cost allowance. If you later have to repay it, you add the repayment back.

Landlords are eligible for several programs: Ontario’s Home Renovation Savings (at the rental rate), the upcoming National Heat Pump Rebate (one rebate per person, so a landlord who claims for a rental can’t also claim for their own home) and LogisVert’s bonus for older multi-unit rentals.

Home-based business use

If you claim business-use-of-home expenses, part of your home is treated as earning income. Upgrades and rebates that relate to that part may need the same treatment as a rental. The share depends on how you calculate your home office claim, so this is a good moment to involve whoever prepares your return.

Québec: the Relevé 27 slip

Québec government bodies issue a Relevé 27 (RL-27) to report subsidies and other payments. When a LogisVert grant is approved, Hydro-Québec may ask for your social insurance number so it can issue one.

Receiving a slip doesn’t automatically mean the amount is taxable for you, but don’t file it away unread. Whether it belongs on your return depends on how the property is used: it’s most likely to matter for landlords and businesses. Revenu Québec’s RL-27 guide, or your tax preparer, can confirm your case.

Tax credits you might combine

There is no federal tax credit for energy upgrades themselves, but two renovation credits often overlap with energy work, for example when a new suite for a parent gets a heat pump:

The Multigenerational Home Renovation Tax Credit is refundable and worth up to $7,250 for 2025 and $7,000 for 2026 (14% of up to $50,000 of eligible costs). The Home Accessibility Tax Credit applies to up to $20,000 a year of eligible costs, worth up to $2,800 for 2026. Some expenses can be claimed under both. Keep track of any rebate you received for the same work: you should only claim what you actually paid.

Keeping the right records

One folder (paper or digital) per project makes tax time and any program audit painless. Keep:

• Contractor quotes and final invoices, with model numbers.
• Proof of payment: card or bank statements, cancelled cheques, financing agreements.
• Rebate approval letters, payment confirmations and any slips such as an RL-27.
• Energy assessment reports and nameplate photos, which programs can ask for after payment.

The CRA generally expects you to keep supporting records for six years after the end of the tax year they relate to.

When to ask an accountant

A short conversation is worth it if any of these apply:

• The property is rented, partly rented, or you’re converting part of it into a suite.
• You claim business-use-of-home expenses.
• You received an RL-27 or another government slip for the rebate.
• You’re claiming the multigenerational or accessibility credit on the same work.
• You own several properties or are retrofitting a multi-unit building.

For everyone else, the practical advice is simple: claim every rebate you qualify for. Our stacking guide shows how to combine them.