The board representing Toronto realtors is pressuring provincial politicians to provide a permanent tax rebate to homeowners for renovations.
At present there are approximately 3.2 million homeowners in the province of Ontario and last year these homeowners spent approximately $20.3 billion in renos.
According to Toronto Real Estate Board (TREB) president, Richard Silver, the rebate would benefit Ontario’s economy in two ways:
- it would reduce the number of underground transactions (which would also help to replenish the provincial government’s tax coffers);
- it would stimulate the appreciation value of these renovated homes, which could support the province’s home resale value market.
According to statistics from Altus Group, the underground economy eats up 37%, or $5.2 billion, of Ontario’s home renovation industry each year. This costs the government $298 million in HST revenue and $1.6 billion in income tax revenue, according to the Ontario Home Builders Association.
For homeowners, the rebate could encourage more renovation projects. “This is a good thing because home renovations help to create jobs and generate tax revenue for the government – worthy goals that all provincial politicians should support and encourage,” Silver said.
These renovations could lead to increases in property value, which could support the resale market and could lead to increased property tax revenues for municipal governments. A further bonus is that many upgrades increase the energy efficiency of properties.
Given the state of the Canadian economy, TREB’s request should actually be extended to all provincial governments. By providing a permanent rebate on home renovations, we can stimulate asset-backed spending (a form of good debt if used judiciously), which would stimulate jobs and the economy.