Budget provision also expected to help forestry by spurring demand for wood
Derrick Penner, With Files From Jeff Lee
Sun
A tax credit for home renovations worth up to $1,350 included in Tuesday’s federal budget is expected to be a boost to both British Columbia‘s residential construction sector and its now long-suffering forest industry by increasing the demand for wood products.
Homeowners will be able to claim the 15-per-cent credit on renovation work worth more than $1,000 and up to a maximum $10,000 for any home improvements, save for routine maintenance, between now and Feb. 1, 2010.
That is good news for Jeff Bain’s JKB Construction Ltd., a three-person home-reno firm based in Port Coquitlam, which saw business slow over the last couple of months in what was otherwise a busy 2008.
“[The credit] can only mean increased business,” Bain said in an interview. “I think with the stalled economy we’ve had lately everybody’s been having a few jitters and been waiting on this budget to see what’s happening with their jobs.”
And an increase in business should help employ residential construction workers who expect to see lower levels of new-home building in 2009, Peter Simpson, CEO of the Greater Vancouver Home Builders’ Association said.
Housing starts slipped at the end of 2008, and forecasts have 2009 starts sliding anywhere from one-third to half of last year’s levels.
“When you look at what’s happened with new construction, of course we do have job losses,” Simpson, said.
With the tax credit to encourage homeowners to take on home improvements coupled with a growing pool of unemployed construction trades, home renovators “will have access to these tradespeople and be able to take on extra work. This tax credit will help that and will mean more work for tradespeople.”
Bain said the availability of tradespeople from the new-housing sector will help weed out the less-than-competent workers who have been working in home renovation.
“Last year, it became a little bit silly trying to find qualified trades,” Bain said, “and prices were escalating because everybody was so busy.”
Homeowners will be able to claim the home-renovation credit on their 2009 tax returns, which will also have an ancillary effect of drawing more home improvement projects out from the underground economy, according to Simpson.
The federal government estimates that the credit will provide about $3 billion in tax breaks to about 4.6 million families, which should offer a measure of support to B.C.’s beleaguered lumber industry.
Provincial Finance Minister Colin Hansen said home renovations consume a lot of wood products, and “the more we can build our own domestic consumption of wood products that helps forest families.” “The home renovation tax credit is not only something that puts construction workers to work, but home renovation consumes a lot of wood and I think that is good news for the forestry sector.”
Also on the home front, the government will put an extra $300 million over two years into energy retrofits, raise to $25,000 the amount first-time home buyers can borrow from RRSPs, and provide up to $750 in tax relief to help with their purchases.
RENOVATION CREDIT
From now until Feb. 1, 2010, the federal government’s Home Renovation Tax Credit will offer homeowners a tax break on fixing up their homes, which is expected to bolster employment in the construction sector and help the market for B.C. forest products. Details of how it works are below.
– the tax credit: 15 per cent
– For renovations worth more than $1,000 to a maximum $10,000
– Maximum credit: $1,350
– Homeowners claim the credit on their 2009 tax returns
– Eligible expenses include: kitchen, bathroom or basement renovations; new carpeting or flooring; building additions, decks, or retaining walls; installing furnaces or water heaters; interior and exterior painting
– Ineligible expenses include: routine maintenance, the purchase of furniture, appliances, tools and snow removal
– Estimated number of families to benefit: 4.6 million
– Total value: $3 billion
Source: Federal budget.
© Copyright (c) The Vancouver Sun