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That question is more relevant than ever because the 2009 federal budget now provides a temporary incentive for Canadians to implement new renovation projects or accelerate planned future projects with the Home Renovation Tax Credit (HRTC.)

Determining whether a home improvement will add value to your home can be tricky. There are many factors to consider. Some factors are tangible like the cost of making the improvement. While other factors are less tangible and harder to quantify, like the improved quality of life the home improvement brings you and your family.

When making a dollars and cents evaluation, first consider the costs involved in making a home improvement. Be sure to factor in the costs for materials, labor, building plans, building permits and any changes to your homeowner’s insurance.

Then consider how these improvements will impact the value of your home — positively or negatively. (Not all home improvements add value. Some can even decrease the value of your home.) Remember, your return on investment can vary as the real estate market changes. The value of a home is not always reflected by the selling price. (In a "sellers market" your home’s value may be lower than the home’s selling price and vice versa in a buyer's market.)

Remodeling Online http://www.remodeling.hw.net/2008/costvsvalue/national.aspx evaluated over 20 home improvements in their annual Cost vs. Value Report. This report analyzes the percentage of cost returned for a home improvement when comparing cost to construct versus added resale value. (Remember this is a US report so the results could vary in Canada and even vary by city.) Of all the improvements evaluated in the report, none show a positive return this year in a year of declining home values.   This is not to say that some of these improvements should not be considered for your personal enjoyment or to greatly improve the overall marketability of your home if you are considering selling in a competitive market.

Improvements with some of the best returns include: siding replacement , bathroom addition, bathroom remodel, deck addition and kitchen remodel.  These evaluations were conducted in what is considered a buyer’s market.

The temporary HRTC provides a 15% income tax credit on eligible home renovation expenses for work performed or goods acquired after January 27, 2009 and before February 1, 2010.

The credit may be claimed for the 2009 tax year on eligible expenses over $1,000 but not exceeding $10,000 and will provide up to $1,350 tax relief.

Examples of HRTC Eligible and Ineligible Expenditures*
Eligible	Ineligible
Renovating a kitchen, bathroom or basement  New carpet or hardwood floors Building an addition, deck, fence or retaining wall A new furnace or water heater Painting the interior or exterior of a house Resurfacing a driveway Laying new sod	Purchase of furniture and appliances (ex: refrigerator, stove and couch) Purchase of tools Carpet cleaning Maintenance contracts (ex: furnace cleaning, snow removal, lawn care, and pool cleaning)

*Source: Canada’s Economic Action Plan Budget 2009 Jan 27, 2009
Click here for more info on the HRTC.

We hope this information is helpful. If you're now thinking "how am I going to pay for all this?" give us a call and we can discuss getting you a great rate on a home equity line of credit or possibly a mortgage refinance, especially if your current mortgage has a higher rate. We look forward to speaking with you! If you know of someone considering a renovation, feel free to forward this message.

We are pleased to assist with all of your mortgage needs.  Best of all our service is free to you in most cases OAC.  Please call or email us with any questions you may have.

If there are any mortgage related subjects you would like us to address in our blog, please let us know.

Serving all of your BC mortgage needs,

Brian Delany & Starr Webb

www.bcmortgagepros.com