Catherine Wong Bourbeau AMP
Agent # M08003033 - Mortgage Planner
Nov 09...Renovation Countdown Begins!
If you want to take advantage of the $1,350 home renovation tax credit, you’ll need to get that renovation done before February 1, 2010. So if it’s time for a new roof, new flooring, or a fresh new recreation room… this is the time to get it done.
Here’s the detail. For renovations done between January 28, 2009 and February 1, 2010, you’re eligible to claim a 15% credit against your renovation expenses after the first $1,000. The maximum tax credit is $1,350, which represents $9,000 worth of renovations, and comes directly off your taxes owing. A wide range of renovation expenses qualifies for the credit; go to the Canada Revenue Agency web site where there is a list of eligible expenses.
If your renovation project includes some energy-saving home improvements, you may also be able to tap into grant money under the ecoENERGY retrofit and other government and local programs. You may therefore be able to benefit from both of these incentive programs for one renovation project.
But what about the upfront financing for larger projects? If you’ve built some equity in your home, you may be able to unlock the financing you need for those projects. Assuming your current mortgage is $150,000, here’s an example of how you can roll your renovation cost into your mortgage and have one, easy monthly payment. You can then use your prepayment privileges to pay your renovation project off faster.
Renovation Cost Mortgage Amount Monthly Payment*
$20,000 $170,000 $ 917
$40,000 $190,000 $1,025
$60,000 $210,000 $1,133
*Assumes 4.25% 5-year rate, 25-year amortization. OAC
Want another reason to renovate now? It pays to renovate. The right improvements will boost the value of your home. So you’re building on your biggest investment – while you enjoy your improvements every day. Before you choose a renovation project, then, it’s worthwhile to consider what the impact will be on the appraised value of your home – in case you ever want to sell. The Appraisal Institute of Canada (www.aicanada.ca) has a good idea on which renovation projects can maximize the value of your home – and which ones just don’t pay, financially.
To check on the estimated payback, visit the RENOVA section of the Appraisal Institute’s website, which has an interactive web-based guide to the value of home improvements. RENOVA is designed to give you a better idea of the return on investment you can expect for a variety of home improvements. You simply input the amount you plan to spend on one of the 25 listed renovation types, and you’ll receive an estimate of the effect this home improvement project may have on the value or resale of your home. Even if you are renovating for personal reasons only – to improve the livability of your home - it just makes good sense to understand how that investment might payback in the value of your home.
In today’s great interest rate environment, homeowners aren’t renovating just because they want to… but also because they can. Many are taking advantage of the Home Renovation Tax Credit, and incredibly low mortgage rates to refinance their mortgages, potentially saving thousands of dollars, while extracting some of that equity for a renovation project or two. If you’re interested in renovating, a great place to begin is with a call to your mortgage planner.
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