Home renovations can cost a pretty penny, even when you’re trying to stay on budget. But it looks like there could be a tax break in our future. If you’re thinking of renovating this fall or winter season, you may want to hold off on calling a general contractor on our directory. Here’s why.
Why should I hold off on renovations?
The Canadian election is on its way and if the federal Conservative party is re-elected in October, there could be financial benefits on the way for future home renovators.
While out on the campaign trail, Prime Minister Stephen Harper announced upon his party’s re-election, the party would reinstate a home renovation tax credit that was once popular several years ago.
Why is this important?
The home renovation industry isn’t slowing down anytime soon. A recent report from Altus Group Ltd., a real estate consultancy, says Canadians spent $68-billion on home renovations last year in comparison to $48 million spent on building new homes. Renovations have increased almost 4 per cent in the last year and accounted for 3.4 per cent of the country’s GDP.
“We currently spend substantially more as a nation on improving and repairing our existing homes than on constructing new ones,” the consultancy wrote.
If in October the Conservatives are elected once again, the tax credit can be phased in within the 2016-2007 budget year, Harper announced in Toronto on Tuesday. That home renovation you’re worried will cost too much money? That tax credit could go a long way.
History of the tax credit
This particular tax credit isn’t a new phenomenon. It was first launched by the government in 2009. Here’s how it worked:
- It allowed homeowners to claim a 15 per cent tax refund on renovations.
- Home renovations soared once the tax credit was in effect.
- Almost 3 million Canadians took advantage of the program.
- The tax credit provided an average return of $700 per claim.
- The program generated over $4 billion worth of economic activity, says government estimates.
But the tax credit cost the government a lot of money in terms of lost tax revenue. Once it was scraped in 2010, the home reno industry took a big hit, then picked back up the following year.
So, what does this mean for the new tax?
If the tax credit is put into place, it will be a much smaller tax credit, which will be capped at $5,000 spending instead of $10,000 in 2009.
If you’re planning on renovating your home, it might be worthwhile to see how the next election plays out. Who knows – you could end up saving quite a lot of money remodeling that outdated bathroom on the main floor!
If you want to get a head start on your planning, why not consult our extensive directory? We have a laundry list of professionals, including general contractors who specialize in total home renovations, and kitchen specialists to name a few.