Agents could be open to a growing pool of investors if the Conservative government re-introduces its home renovation tax credit, which paid dividends for agents during the 2009 recession.
The Conservative government has announced plans to bring back the home renovation credit if they are re-elected in October, an opportunity that industry players like Brandon Sage used to attract investors.
“It was helpful when it came to selling a property because you could factor in the costs that were need for renovation before making an offer,” Sage told REP.
“But the government decided to play political games and get rid of a program that should have never been removed. Obviously it’s an election year and it wants to appeal to the (real estate) demographic, but it certainly helped me make sales (in the past).”
According to Harper’s announcement, taxpayers would be able to claim up to 15 per cent of the cost for permanent renovation to homes, condos and cottages. The tax credit would apply to renovations that cost anywhere between $1,000 and $5,000, allowing investors to collect up to $750 a year.
The move, if successful, is expected to cost $1.5 billion a year. The Toronto Real Estate Board has been calling for this move for years, claiming significant benefits to the economy and the real estate industry.
“Renovations lead to increases in property value, which leads to increases in property tax revenues that would mitigate any potential loss of tax revenue from the Renovation Tax Credit,” according to an editorial submitted to REP’s sister publication CREW in 2011. “A further bonus is that many upgrades increase the energy efficiency of properties. A true win, win and win.”
It gives agents another avenue to appeal to investors, who will often need to undertake some form of home renovations for their investment properties, whether it be multi-family units or mixed-use commercial and residential spaces, said Sage.
Whether it be electrical work for sub-metering, insulation improvements or other renovation needs, understanding tax credits and how they work for specific properties is a great way for investor clients to improve their bottom line.
Still, the credit’s re-introduction is contingent on a Conservative victory in the fall and some recognize that the move could be a smokescreen to distract the real estate demographic from their party’s economic record, which Sage said is “not that great.”