Ottawa is offering rebates of up to $1,350 on the first $10,000 spent on home renovations completed before Feb. 1, 2010.
Renovation rebate a hit
October 22, 2009
Business Reporter
Renovator Mike Martin's phone has been ringing more than usual recently as customers try to take advantage of a federal home renovation tax credit.
"It started off slow at the beginning of the year, but then the procrastinators are trying to get the job done before the end of the year when the rebate ends," he said.
The tax credit – up to $1,350 on purchases of $10,000 (the first $1,000 is not eligible) – applies to home renovation expenditures made after Jan. 27, 2009 and before Feb. 1, 2010.
A majority of Canadians plan to claim the tax credit, with almost half doing more work because of the rebate, says a survey by Ipsos Reid for the Royal Bank of Canada released Wednesday.
"If you're getting back a thousand bucks, you might end up using that on a nicer kitchen sink or floors," said Martin.
However, renovators are worried jobs that might have been started next year are being pulled forward because of the credit.
That seems to be true. According to the survey, 67 per cent of Ontarians plan to renovate in the future, down from 71 per cent last year.
The recession is likely one reason, but the tax credit may also have encouraged some of those consumers to complete projects this year, instead of in the future, said Doug Crowe, vice-president of mortgages for RBC.
Ontario homeowners expect to spend an average of $12,428 on home improvements this year, higher than the national figure of $11,272.
Martin, who chairs the Ontario Home Builders' Renovation Council, said the group is lobbying Ottawa to extend the tax relief program. Renovators are also worried Ontario's new harmonized sales tax, which takes effect next year, will be a major disincentive for consumers to renovate.
The survey found that cash remains king during unsteady times, with 76 per cent of those planning to renovate paying for their projects out of savings. That's compared with 70 per cent in 2008. Fewer plan to use their credit cards – 24 per cent compared with 32 per cent just last year.
However, 21 per cent plan to use equity in their homes to finance their renovations, up from 13 per cent in 2006.
Bathroom and kitchen renovations are the most popular planned upgrades.
The poll was conducted between Sept. 8 and 16 based on a national sample of 3,120 homeowners. It has a margin of error of plus or minus 1.8 percentage points 19 times out of 20.
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