Mortgage Matters

The Home Renovation Tax Credit (HRTC) can help improve the value of your home.

Renovating your home is an investment in the long term value of your home. Here’s how the 2009 Home Renovation Tax Credit can work for you. Canadian homeowners can claim a 15% non-refundable tax credit for eligible expenditures exceeding $1,000, but not more than $10,000, meaning that the maximum tax credit that can be received is $1,350 ($9000 x 15%). Taxpayers can claim the HRTC when filing their 2009 tax return.

What is the eligibiliy period for the HRTC?

The HRTC will apply to eligible home renovation expenditures for work performed, or goods acquired, after January 27, 2009 and before February 1, 2010.

Who can claim the HRTC?

Eligibility for the HRTC will be family-based which means the credit can only be claimed once per family. A family is generally considered to consist of an individual, and where applicable, the individual’s spouse or common-law partner. Family members with joint ownership will be able to share the credit. The credit can be claimed on eligible expenditures incurred on one or more of an individual’s dwellings. Renovations to houses, cottages and condominium units that are owned for personal use are eligible for the HRTC.

What should you do?

Keep your original receipts for eligible home improvement purchases and labour (eg. contractors) and submit them for a tax credit when you complete your 2009 tax return.

What types of products, services and expenses are eligible?

Eligible

_ 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

_ Laying new sod

_ Labour costs

_ Professional fees

_ Building materials

_ Fixtures

_ Equipment rentals

_ Permits

Ineligible

_ Furniture and appliances (refrigerator, stove, couch)

_ Purchase of tools

_ Carpet cleaning

_ Maintenance contracts (furnace cleaning, snow removal, lawn care, pool cleaning, etc.)

 

Source: Canadan Revenue Agency and the Department of Finance Canada www.cra.gc.ca for more information.

 

 

 

 

 

Reviews Home Renovation, HRTC, Tax Credit

It means that you can get a 5 year fixed rate Mortgage for as little as 3.69% Quick Close Special (the lowest in Canadian history) and a variable rate at 2.85% (Prime plus 0.60).

Another important point, never before made, is that the Bank of Canada is going to hold the overnight lending rate steady until June 2010.  

So if you currently have a variable rate, now is not the time to lock in if the Bank holds true to its promise.

Many people who are in fixed rates are looking at refinancing their mortgages into lower rates.  The penalty to break an existing mortgage is the greater of three months interest or what is called the interest rate differential. The interest rate differential is the lost interest between your current rate and market rates.  Whether this is worth your while can only be decided on a case-by-case basis.

I listened to Benjamin Tal, chief economist of CIBC and his comments regarding the variable rate mortgages where as follows:

“You might do better the first two years [of a five-year mortgage] but not the remaining three. I’m convinced long-term interest rates will rise. I can see [long-term] rising 200 basis points. These are emergency rates and at some point this emergency will end,” says the economist.

The banks and the mortgage insurers are becoming more stringent on their lending criteria; minimum credit score requirements have increased, if you are self-employed they are wanting more documentation and appraisals are getting harder too – they look at the appraised value as opposed to the purchase price.  If your credit is less than perfect, this can also be challenging, that is why we are finding more and more people seeking out the expertise of an accredited mortgage professional.

Written by:  Charmaine Idzerda, (AMP) Mortgage Broker   FSCO# M080000747
Verico Designer Mortgages Inc.  www.DesignerMortgages.ca    FSCO# 10194
Tel: 905.336.5997, Tollfree 1.866.824. 8057

 

Reviews Bank of Canada, interest rates, rate hold

During Canada’s “Housing Boom”, that occurred roughly from 2002 to 2008, unsound price increases drove up levels of building. Affordability of these prices have diminished significantly leaving a large disconnect between house prices and income. This situation was in great need of a correction. Our view is that house prices exceeded the value of housing that was justified by fundamentals by approximately 9% nationwide. This overpricing forced a level of residential construction that exceeded its fundamental-justified level by approximately 12%, an excess that was exaggerated in the past three years. The current unwinding of house prices reflects both a cyclical downturn and a return of house prices to fundamentally justified levels. We consider “overbuilding” of two forms: “demand driven” where homebuyers buy up too many houses and that this demand cannot be sustained; and “supply-driven” where builders accumulate excessive inventories. Although there is evidence of both types, we contend that Canada’s “overbuilding” was mainly of the first type, where homebuyers pushed homebuilding to an unsustainable pitch that is now being rapidly reined in. While most markets won’t face U.S.-style overhangs, the construction of too many new homes over the boom means a deepened slump. While Ontario homebuilding will reel from a cyclical downturn, the degree of structural weakness appears limited – with the important exception of the Toronto condo market. Both in Toronto and Vancouver, historically high levels of apartment-style units presently under construction mean that record numbers of condos will reach completion during 2009. If absorption rates fall, as cyclical factors would indicate, condo inventories could spike severely. However, Canada will not experience a U.S.-style housing crash, owing to less overbuilding and more conservative lending institutions

Source: www.td.com/economics

Reviews Canadian Housing, Housing Boom, overbuilt housing, Overpriced housing