There's going to be a $3 billion home renovation bonanza in 2009, thanks to the recent federal budget as home owners take advantage of the new Home Renovation Tax Credit to spruce up their homes, condos or cottages.
The $3 billion for home renovations is part of nearly $8 billion in action to stimulate housing and construction with additional funds targeted at social housing construction or renewal, a new tax credit for homebuyers to offset closing costs, an increase in the withdrawal limit under the RRSP Home Buyers' Plan and more funding under the ecoEnergy Retrofit program.

That's over and above the stimulus flowing from the federal government's massive commitment to infrastructure as well as income tax cuts detailed in other parts of the budget.

Taking a closer look at the Home Renovation Tax Credit, this could very well be the most effective element of the federal budget from the standpoint of generating immediate spending.

If you have been contemplating a renovation, the best time to do it is between now and Feb. 1, 2010, because the government is going to give you a tax credit of up to $1,350 for doing so.

The tax credit is available on home renovation expenditures in excess of $1,000 to a maximum of $10,000. You can spend more, but the maximum tax credit is on $9,000, which will net you the maximum tax credit of $1,350.

You can have your kitchen, bath or basement redone. You can have your windows replaced. You can have new carpet or hardwood floors installed. You can build an addition, deck, fence or retaining wall. Get it done in the next year and the government will help you out financially.

You can even claim the cost of the building permit, professional fees and equipment rentals.

Items not eligible for the tax credit include furniture and appliances or electronics, construction equipment or routine repairs and maintenance such as lawn care, snow removal or pool cleaning.

Perhaps the best news of all is that you can claim energy-efficient retrofits under the existing federal and provincial energy efficiency retrofit incentive programs to a maximum of $5,000 per level of government, $10,000 total, over and above the home renovation tax credit.

As far the RRSP Home Buyers' Plan, first-time buyers can now withdraw up to $25,000 per person or $50,000 per couple compared with $20,000 and $40,000 previously, to put towards a home purchase.

The First-Time Home Buyers' Tax Credit is a $5,000 non-refundable income tax credit to offset closing costs such as legal fees and disbursements and land transfer tax.

For an eligible individual, the credit will provide up to $750 in federal tax relief starting in 2009.

Getting back to the Home Renovation Tax Credit and ecoEnergy initiatives, we think they are both great and should have the desired effect of stimulating some immediate spending, not to mention a secondary boost when home owners get their tax refunds in spring 2010.

If I could issue a cautionary note to home owners, it's that due diligence is still the most important thing in hiring a contractor.

BILD represents professional renovation contractors under the auspices of our RenoMark program. Visit renomark.ca for more information or plan to visit Destination Renovation at the National Home Show, Feb. 20 to March 1 at the Direct Energy Centre, Exhibition Place (nationalhomeshow.com).

Stephen Dupuis is president and CEO of the Building Industry and Land Development Association. The views expressed are those of the president.

For more information on buying or selling a home please contact Eva Novotny, Remax Ultimate, 416-487-5131 or email eva.n@sympatico.ca.