With the Jan. 31 deadline just around the corner, anyone who still wants to take advantage of the federal government's popular home renovation tax credit had better hurry.
"The most important thing for people to know is that they still have 10 days to buy and take delivery of materials that they are thinking of using for renovations," Jamie Golombek, managing director of estate and tax planning with CIBC Private Wealth Management, said in an interview.
Although it is likely too late to get the labour done in time, "anyone thinking of doing anything in their home in the next few months should try to get that material now ... otherwise you are really losing out."
The home reno tax credit, introduced as a limited-time program in the 2009 federal budget, has proven extremely popular with housing-obsessed Canadians. "Anecdotally, it is the topic of almost every single presentation I give in terms of personal tax. The Canada Revenue Agency (CRA) has responded to more questions in terms of what qualifies and what does not than any other topic in recent history," Mr. Golombek added
The CRA estimates that as of last Friday, more than four million Canadians had enquired about the program. From Jan. 2 to 15 alone, 302,501 people visited the CRA website or phoned to ask about the home renovation tax credit (HRTC).
Timing has played a role in the HRTC's success, says Mr. Golombek, given that rates for home equity lines of credit are still historically low. "Even if people don't have the actual cash to do the renos right now, they can borrow the money at very attractive interest rates and get a 15-per-cent non-refundable credit from the government."
Who's using it?
Dan Wilson is one many Canadians taking advantage of the credit. He and his neighbour spent most of the fall rebuilding the front porch on their east-end Toronto semi. He also had a contractor fix a flat roof, put in a new deck, installed two fireplaces and painted.
"I spent at least three times the limit for the tax credit," said the 45-year-old Ontario government worker. "I think almost everyone on my street had something done to take advantage of it."
Robert Katzer had a contractor redo both bathrooms in his Victoria condo, putting in marble sinks and faucets, along with a new bathtub with marble wall linings. Not done there, he upgraded most of the lighting in the unit, replaced the carpets, painted, caulked the windows and retiled the fireplace. "It wasn't cheap but I love the end result," he said.
Across Canada, the tax credit seems to have provided the push many Canadians needed to get those home reno projects going.
Mr. Wilson says he might have done the renos in the next year or two, but the tax credit prompted him to do it now. "I love this credit. The prospect of getting $1,350 back is just so appealing. If it were continued next year, I would definitely consider redoing my kitchen next year."
How long will it last?
Contractors and home renovation retailers would also like to see the tax measure extended, arguing that it would continue to boost the economy and allow the recovery to fully take hold.
But Finance Minister Jim Flaherty said this week the measure was "not inexpensive" and the government's plan is to let it expire at month's end.
RBC Dominion Securities Inc. chartered accountant and certified financial planner Suzanne Schultz says the credit has been successful. "The point of this was to get the economy going and it seems to have done that. People are spending. Retailers and contractors are saying they are busy."
Ms. Schultz urged people to get out and make their purchases before the Jan. 31 deadline. "Make a list of what you need done and get shopping. This is not common, for the federal government to introduce short-term tax measures like this."
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HOW THE RENO CREDIT WORKS
Each family can claim on their 2009 income tax return a 15-per-cent non-refundable tax credit for eligible renovation expenses made to their home, cottage or condo. The credit allows taxpayers to get up to $1,350 in tax relief for projects worth between $1,000 and $10,000.
To qualify, the renos must take place after Jan. 27, 2009, and before Feb. 1, 2010. The materials must be bought and in your possession before Feb. 1, 2010, to be eligible. Likewise, any work done by a contractor must be finished by the deadline, which means that signing a contract for the work ahead of the deadline isn't sufficient.
To qualify for the HRTC, renovations must be of "an enduring nature and integral to the dwelling." So putting in a permanent swimming pool or hot tub, a new dock or septic system at the cottage, fixing a retaining wall or doing some landscaping all qualify. Cleaning your carpet, house or eavestrough would not qualify, nor does buying furniture, appliances or electronics.
Roma Luciw