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Tax credits help with home renovations

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(Special) - Canadians looking to renovate their residential real estate have access to a number of government programs that can make the costs a little less burdensome.

The residential renovation industry in Canada has been on a steady incline for almost two decades, doubling since the late 1990s. A recent report by the Altus Group shows that Canadians' total spending on home renovations rose to $63.4 billion in 2013 from $61.5 billion in 2011 and is forecast to hit $65.2 billion this year and $67.3 billion in 2015.

Vibrant residential renovation spending is being fuelled by a number of factors such as low interest and mortgage rates, government tax credits, rising home values and what Altus calls the Home and Garden TV (HGTV) effect, which came into being with the launch of HGTV in late 1997 and the beginning of the home improvement television programming craze.

There are a number of government incentives that apply to the renovation sector.

Quebec is currently the only province in the country that has a broad-based renovation incentive through its LogiRenov tax credit.

The credit is intended for individuals who are owner-occupants and carry out renovation work on their principal place of residence between April 24, 2014 and December 31, 2015. It will apply to renovation expenses exceeding $3,000 at the rate of 20%, for a maximum credit of $2,500. The renovation work must be carried out by a recognized contractor under an agreement entered into after April 24, 2014 and before July 1, 2015.

Quebec's EcoRenov program offers a credit of up to $10,000 for eco-friendly renovation work on an owner or co-owners principal residence or cottage, provided the latter is suitable for year-round occupancy. The work must have a positive environmental impact or improve the dwelling's energy efficiency, and the materials and appliances involved must meet recognized environmental and energy standards

Eligible work includes insulation of the roof, exterior walls, foundations and exposed floors, water-proof sealing of foundations and air sealing of the dwelling's envelope or part of it, replacement or addition of doors, windows and skylights with ENERGY STAR qualified models, work relating to mechanical systems such as heating, cooling, hot water and ventilation, water conservation and quality, soil quality and construction of green roofs.

The amount of the credit is 20 per cent of eligible expenses that exceed $2,500 up to a maximum credit of $10,000 per eligible dwelling. The credit is only for the 2013 and 2014 taxation years and work must be performed by a qualified contractor under a contract entered into after October 7, 2013 and before November 1, 2014.

If you are the co-owner of an eligible dwelling, you can split the amount of the tax credit with the other co-owner(s). However, the total amount claimed in respect of the dwelling cannot exceed $10,000.

Senior citizens in Ontario and British Columbia have access to tax credits of $1,500 a year and $1,000 a year respectively to perform certain home renovations to improve accessibility and make it easier for them to be more functional and mobile at home.

Eligible renovations would include wheelchair ramps, stair lifts, elevators, raised toilet seats, motion-activated lighting, non-slip flooring, shower grab bars, hands-free taps, automatic garage door openers and additional light fixtures inside and outside the home.

"Renovators reported an increase in the past year in requests for renovations designed to increase the energy-efficiency of a home, which may in part be due to incentives related to this type of work," the report noted. "No increase was reported, however, for renovations related to accessibility for seniors."

While renovating your home may improve your lifestyle and add value to what for most people is their largest single asset, the majority of Canadians may not be aware of the insurance implications of giving their living space a facelift.

Upgrades requiring extensive work such as adding an extension on your home may require you to change your entire policy to a building under construction. If you're not living in your home during renovations it becomes an easier target for thieves and undetected water damage and your insurer may require you to secure a vacancy permit if you move out for more than a month.

Although contractors are professionals, accidents do happen. If a contractor or their employees are injured on your property you could be liable for their medical bills, lost wages or damages for pain and suffering - all out of your own pocket.

You may want to ask to see a public liability insurance certificate before choosing a builder. The amount of insurance coverage they have will depend on the type of renovation, the number of employees and cost of the renovation. The higher the limits of coverage the more protection you have.

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.

Copyright 2014 Talbot Boggs

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