The leaks in the plan to fix my leaky roof

BUDGET 2009: HOME RENOVATION TAX CREDIT

DEREK DeCLOET

·           January 29, 2009

Good news! My roof is leaking. We noticed how bad it was getting last fall, when it rained and bits of plaster began to flake off the ceiling in the smallest bedroom upstairs. Lately, the problem hasn't gotten any worse, perhaps because Toronto is locked in a new ice age.

Assuming the glaciers retreat by spring, though, there's going to be trouble overhead. So was I ever glad to see Finance Minister Jim Flaherty's new temporary Home Renovation Tax Credit (HRTC). It will give a 15-per-cent tax credit, up to $1,350, on any home fix-it project that is "enduring in nature" and costs more than $1,000. What's the definition of "enduring in nature"? It appears to be anything that lasts longer than one year.

My new roof will certainly last longer than a year, unless I attempt the work myself, in which case it will take eight months to finish and will be leaking again three weeks thereafter. Luckily, I've already lined up a nice young man from Newfoundland to handle the job. By my calculations, the credit will save me $750 in taxes, based on his quote of roughly $6,000.

Thank you, Mr. Flaherty - and you too, Michael Ignatieff, for ensuring the budget will pass before the melting season begins. As tax policy, it is ridiculous. But the Commons is going to take care of my house. Why complain?

The Newfoundland kid did say he'd give a price break if I paid in cash. In that case, I'd presumably save $300 in GST. I don't want to give his business secrets away, but in total, I'd save more than $750.

And the money would be in my pocket today, not next year at tax time, which means I could go out and, you know, stimulate the economy when it's really needed. Of course, I'd never abet such a scheme to deprive the federal treasury of even a tiny portion of its rightful $225-billion in revenue. Who would? It's morally wrong, and that's why home renovations in Canada are never, ever done under the table.

It's a certainty that thousands of others will be taking up Mr. Flaherty on his generous offer to subsidize the home repairs they were planning to do anyway. And it's an equally sure thing contractors, painters and roofers will jack up their estimates accordingly, to claim a piece of the tax break for themselves. Maybe the Newfoundland kid will now say his quote is no longer valid. Those Newfoundlanders aren't dumb. They re-elected Danny Williams, you know.

Anyway, it's a quite a change from the Finance Minister who once declared that the federal government is "not in the pothole business." Maybe not on roads and highways, but if the pothole is in your driveway, Ottawa is pleased to assist. Driveway resurfacing is mentioned specifically in the budget as being HRTC-eligible. If you put down new sod, that's also eligible for a tax break, even if your teenage son tears it up practising his golf swing. But a new washing machine is not "enduring" enough.

If you lay a new carpet, that's worthy of a tax credit. But if you clean an existing carpet, it's not. What about a throw rug? The budget is not clear, but you've got to believe that someone, somewhere in the Department of Finance is considering the revenue implications of throw rugs versus carpets. Ah, well. The tax gurus need something to do, now that they've settled that bruising debate over the GST status of Timbits.

The most hilarious part isn't the arcane rulebook. It's the "examples" Finance officials have helpfully written to illustrate how the tax credit works. On page 129, Sally and Ed decide to replace their windows and insulation, and get tax relief of $1,350. Maybe next time they should inject some reality: "Sally and Ed decide to renovate their kitchen. After three months of arguing about it, Ed moves into the basement. The paint he buys to brighten his dismal new 'bachelor pad' is eligible for a tax credit, but the used couch is not."

And what will be the tax cost of all this hammering and painting and deck building and stimulating? About $3-billion over the next 14 months, Finance says. That's a lot of money, but it's nothing compared to the total cost of all the other exemptions and credits that governments have been inventing for years to suck up to this interest group or that industry.

Our tax system is riddled with these. Ottawa gives credits and deductions for buyers of textbooks, for tools for tradespeople and apprentice mechanics, for transit passes, for interest on student loans, for kids' soccer camp fees, for investors in speculative mining shares, and on and on. Liberal and Conservative governments alike are both at fault. Wonder why Mr. Flaherty can't afford to do more with income tax cuts? This is a big reason.

Many tax credits are legitimate. Who could seriously argue against giving a break for the cost of caring for young children, or the disabled, or educating university and college students? Those are in the public interest.

Fixing my roof is not. But I'll take the money anyway. Thanks again, Minister.

 

New tax credit for home improvements has a short lifespan

Homeowners can claim 15% of costs on projects worth $1,000 to $10,000

Jan 28, 2009 04:30 AM

MADHAVI ACHARYA 
TOM YEW 
DANA FLAVELLE 
BUSINESS REPORTERS

OTTAWA–Installing a new furnace this year? Building a deck?

The proposed federal budget offers a temporary new tax credit for your home renovations – provided you do them soon.

The Home Renovation Tax Credit (HRTC) is designed to get Canadians spending now to help create jobs in industries typically hurt by an economic downturn.

"These measures to support home construction and renovation will help stimulate our construction and building-supplies industries," Federal Finance Minister Jim Flaherty said in his speech. "This in turn will support forestry and other Canadian industries. It will give an immediate boost to our economy, and help to create jobs."

Effective today through Jan. 31, 2010, homeowners can claim a tax credit for 15 per cent of renovation expenses between $1,000 and $10,000. The maximum tax credit (on $9,000 in renovations) is worth $1,350.

The government estimated the total value of the tax credit at about $3 billion, and expects about 4.6 million families to benefit.

The tax credit would apply to a variety of home improvements, such as renovating a kitchen, bathroom or basement, new carpet or hardwood floors, building an addition, deck, or fence, installing a new furnace, painting the inside or outside of a house, or laying new sod.

Expenses such as building permits, professional services, and equipment rentals are also eligible. Routine repairs and maintenance will not qualify for the credit. Nor will the cost of purchasing furniture, appliances, electronics, or construction equipment.

Houses, cottages and condominium units owned for personal use are eligible.

Canada's leading home improvement retailer, Rona Inc., said the measure is "positive" for the home improvement industry and it would announce additional incentives, similar to those it announced last week in Quebec.

Rona is offering Quebec customers 10 per cent off materials purchased for projects that qualify for that province's home improvement tax credit program.

Rival Home Depot Canada said yesterday it's unclear what impact the tax credit program would have on its business. "We don't know the conditions around it, so it's hard to comment at this point," said spokesperson Tiziana Baccega.

Toronto-area home renovator Mark Denington, who works mainly on jobs valued under $10,000, was skeptical of the program's benefits, saying it's unlikely to sway consumers on a tight budget.

"If you couldn't afford to do a $5,000 job without the tax break, you probably can't afford to it with the tax break," said the Beach neighbourhood contractor.

Denington said the recession has so far been good for his business, because homeowners have been scaling back to focus on the kind of smaller renovation projects he specializes in.

It's too early to tell whether his business will drop off this spring, as it's always slow in January, he added.

Top of Form

 

Reno rage

My kitchen sink was a white plastic laundry tub that wobbled and leaked. Then one night, I lost it

JUDITH MACKAY

From Friday's Globe and Mail

January 16, 2009 at 12:00 AM EST

When I tell people my sink story they're speechless.

I'm 5-foot-3 and after three kids I can still fit into my size 6 jeans. I am not a big woman. But one night many sleeps ago, I ripped out a laundry tub with my bare hands.

This wasn't just any laundry tub. This white plastic laundry tub had served as our makeshift kitchen sink for what became a six-year kitchen renovation. The sink's legs wobbled on stacked pieces of 2-by-4, wedged between plywood that served as our countertop. For the most part it did the trick, but during one dark moment in the depths of our renovation, this mamma had a meltdown.

After we fell in love and married, we fell in love again with a century-old house that had been sitting empty for 12 years. It was owned by a developer and slated for demolition. The old house was beyond reasonable, realistic repair. It was far too expensive for us to afford and far too large for the two of us and our first child, whose arrival was imminent.

A momentary lapse of judgment we signed a deal with the devil and purchased the house. Two days after we moved in I went into premature labour. Our son was born.

Our new home needed, for starters, de-batting (of the flying kind), running water, a septic tank overhaul, a new heating system, new roof, new plumbing and new wiring. The structural work took forever and cost a fortune. After years of dealing with these deficiencies, it was finally time to tackle the kitchen.

My husband decided to hire a crew and gut the kitchen while I gave birth to our second son. From floor to ceiling to exterior walls everything was gone. Gutted. All that remained of the floor were the joists. One misstep could send me plummeting to the basement below.

The refrigerator sat in the back hallway, the stove was stored in the garage. The ancient porcelain sink was dumped in the driveway. Colicky baby in one arm, jealous toddler yanking on the other, postpartum lurking in the shadows, the devil knocking at the door. I. Was. Living. In. Hell.

Weeks became months. A flapping tarp covering the gaping hole where our new bay window should have been was no match for nightly raids by raccoons. I became proficient in microwave cooking and dial-up dinners. Our firstborn thought it was just like camping. I wish.

Finally, a floor: 3-foot by 3-foot slabs of granite, installed to look like one continuous piece. It was magnificent. Radiant heat warmed the granite. Our feet were in heaven. Our children put their cheeks to the floor, marvelling in the magic.

The floor looked expensive because it was. We ran out of money. The renovation ground to a halt.

Months became years. Somewhere along the way the aforementioned tub cracked. It leaked every time I used it. A friend tried to shame my husband into replacing it, but he refused, oblivious to my pain. The laundry tub was supposed to be a temporary measure while our kitchen came together. It had more than earned its keep. It owed us nothing, which is why I am ashamed to say that I took out my renovation rage on it. But I did.

An old apple juice can caught the dripping water that leaked from the tub. As long as I remembered to empty the can, the system worked. After one particularly stressful day and dinner, I began the cleanup routine. I picked up the can and began to pour the catch of the day down the drain when something caught my eye. A dead mouse bobbed in the water, apparently driven to drink like I had been on many recent occasions.

With a tin can filled with stinking dead mouse water in one hand, and a dirty dinner plate in the other, I discovered what my limit was that night because I had just reached it.

I threw the plate against our beautiful granite floor. It smashed into smithereens. It felt good. Two plates felt great. A stack felt amazing. Plate after plate exploded as they hit the granite floor. I felt empowered. I ran out of plates before I ran out of rage. And then I turned my attention to the sink.

With both hands I grabbed my stinking, leaking, teetering white laundry tub and ripped it from the wall. Water spewed from the pipes, turning our granite floor into a death trap. My husband and sons ran into the kitchen. One after another they slid across the floor like Bambi on ice.

If I said we can look back on that night and laugh it would be a lie. I am not proud of my behaviour, but most people sympathize. Renovations are not for the faint of heart. It does not take 24 minutes and three commercial breaks to get to that heavenly "after" shot. And it always costs more than you budget for. Way more.

Our marriage survived that night. Two years later we finished our kitchen renovation, and 19 days after that we welcomed our daughter into our completely renovated world.