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Need to Fund Home Accessibility Renos? Here’s Help

Did you know that if you’re a senior or have a disability, you can get a tax credit for renovations to make your home accessible? As seen in REW.ca

ist2_9976811-happy-senior-woman-holding-a-bowl-full-of-vegetablesThe BC seniors home renovation tax credit assists individuals who are 65 years of age or older with the cost of certain permanent home renovations to improve accessibility or help the senior be more functional or mobile at home.

This program was introduced on April 1, 2012, therefore the renovation expenses must happen on or after this date. Any expenses incurred under an agreement entered prior to this date do not qualify.

When the BC government released its budget last month, it announced an amendment to the senior’s home renovation tax credit, extending the program to individuals that may be eligible to claim the disability tax credit and to the family members living with those individuals. (Learn about the eligibility to claim the disability tax credit here.)

In order to claim the credit for the year if on the last day of the tax year, the individual must be a resident of BC and a senior or a family member living with a senior.

The renovation must be completed to the applicant’s principal residence while the credit can be shared between eligible residents of the home to a maximum amount of the credit. The maximum amount of the credit is $1,000 per tax year and is calculated as 10 per cent of the qualified renovation expense to a maximum of $10,000 in expenses. This credit is a refundable tax credit, which means that if the credit is higher than the taxes the applicant owes, they will receive the difference as a refund.

The renovations or alterations that qualify must assist the senior with an impairment by improving access to the property; improving mobility and function within the property; or reduce the risk of harm within the property.

The following are some examples of renovations or alterations that qualify:

  • Res-Custom-Home-Solutions-1Lowering existing counters/cabinets or installing adjustable ones
  • Pull-out shelves under counter to enable work from a seated position
  • Doorways that are widened for passage, and swing-clear hinges on doors to widen doorways
  • Door locks that are easier to operate
  • Installing non-slip flooring or to allow the use of walkers
  • Turning bathtubs into walk-ins or showers into wheel-in
  • Grab bars and related reinforcements around the toilet, shower and tub
  • Hand rails in hallways
  • Light fixtures throughout the home and exterior entrances
  • Motion-activated lighting
  • Light switches and electrical outlets placed in accessible locations
  • Taps such as hands-free, relocation to front or side for easier access
  • Hand-held showers on adjustable rods or high-low mounting brackets
  • Lever handles on doors and taps, instead of knobs
  • Alterations of sinks to allow use from a seated position (and insulation of any hot-water pipes)
  • Increasing the height of the toilets
  • General renovation costs necessary to enable access for seniors to first floor or secondary suites
  • Wheelchair ramps, stair/wheelchair lifts and elevators

The following are some examples of renovations or alterations that don’t qualify:

  • All appliances, including those with front-located controls, side-swing ovens, etc.
  • Installation of regular flooring
  • General maintenance including plumbing and electrical repairs
  • Installation of heating or air-conditioning systems
  • Home medical monitoring equipment
  • Home security or any anti-burglary equipment
  • Roof repairs
  • Installation of windows
  • Any services to such as home care services, housekeeping services, outdoor maintenance and gardening services and security or medical monitoring services
  • Aesthetic enhancements such as landscaping or redecorating
  • Fire extinguishers, smoke alarms or carbon monoxide detectors
  • Home entertainment electronics
  • Insulation replacement
  • Vehicles adapted for people with mobility limitations
  • Walkers and wheelchairs

img_2111How to Claim the Credit

The credit can be claimed when the applicant files their personal income tax return for 2012 and future years. Schedule BC(S12) must be completed on the tax return and put the amount that was spent on the eligible renovations beside box 6048 and form BC(479).

It is important to retain documentation to support the claim, including receipts from suppliers and contractors. If work has been performed by a family member, receipts for labour and materials must have a GST number.

If a receipt was received at the end of the calendar year and payed it in the following calendar year, the credit is to be claimed for the taxation year based on when the invoiced was received.

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How to Finance Renovations on your New Home

If you need to renovate your new home, there are innovative mortgage programs that can help you out. As seen in REW.ca

With house prices continually rising, sometimes the only home you can afford is a home that needs a bit of updating or needs renovations. But traditional financing can sometimes make these types of home unaffordable. That’s because you first have to come up with a down payment to qualify for a mortgage for the purchase price. Then as soon as you take possession, you have to qualify for some kind of home improvement loan. Not only is it difficult to qualify for two separate loans at the same time, it also makes buying more expensive.

Fapartment-renovations-17899498ortunately, there are innovative programs from mortgage insurers such
as CMHC and Genworth that are designed for just this purpose. These programs helps qualified homebuyers make their new home just right for them, by making customized improvements, immediately after taking possession of their new home. All this is done with one manageable mortgage and with as little as 5 per cent down.

The improvements to be made under such programs can’t include structural changes to the home. Some of the improvements allowed include:

  • Updating or renovating kitchen
  • Updating or renovating bathrooms
  • New flooring
  • New paint
  • Finishing or renovating basement
  • New patio or deck
  • New energy windows/doors
  • Addition of garage, etc.

Some of the parameters of the program include:

  • As low as 5 per cent down payment (conditions apply)
  • Depending on the insurer, you can go up to 20 per cent of the purchase price with a maximum of $40,000 or 10 per cent of the as-improved value
  • Owner-occupied properties only
  • Down payment is based on the as-improved value
  • Other conditions apply

For example, the CMHC Improvements program lets qualified buyers borrow up to 10 per cent of the post-renovation value of a house and use that money to cover the cost of renovations.

Let’s say the house’s purchase price is $400,000 and the renovations you have in mind would increase its value by $40,000. That means the post-renovation value would be $440,000 so you could borrow $40,000 to cover the renovations.

Let’s See the Monthly Savings:

Straight mortgage with $40,000 line of credit:

  • Purchase price $400,000
  • Down payment $20,000
  • Improvements using line of credit $40,000
  • $1,773.51* mortgage + line of credit $316.67** per month
  • Total monthly payments: $2,090.17*

Purchase Plus Improvements:

  • Purchase price $440,000
  • Down payment $22,000
  • Total monthly payments $1,857.52*
  • Improved cash flow and lower interest costs
  • Living in dream home

renovations_page

To qualify, you have to provide a quote from a contractor or suppliers at the time of submitting the application to the lender. Once insurer (CMHC or Genworth) and your lender approve the renovation amount, it’s then added to your mortgage loan. However, you don’t receive the funds until the renovation is complete and has been appraised or inspected. This usually means you will need a short-term line of credit or come up with the funds ahead of time.

The best option is to work with a mortgage expert, such as myself, who has partnered with renovators and suppliers to make this program even more attractive. The renovator and suppliers will take care of the financing for you until the project is finished. Once the work is complete the solicitor will pay them directly the cost of the renovation. You will be rest assured that there will be no cost overruns (unless due to unforeseen circumstances), hidden costs and that the job will be completed on time and on budget.

The good news is that Alisa Aragon from Your Mortgage Solutions Group has partnered with renovators and suppliers to make this program even more attractive. The renovator and suppliers will take care of the financing for you until the project is finished. Once the work is complete the solicitor will pay them directly the cost of the renovation. You will be rest assured that there will be no cost overruns (unless due to unforeseen circumstances), hidden costs and that the job will be completed on time and on budget.

To see whether this type of program can help you affordably improve your new house into the home of your dreams, talk to a mortgage expert and we will provide you with a no-charge analysis of your needs and financial situation.

* Mortgage based on 5 per cent down payment with a fixed rate of 2.59 per cent, closed for five years and 25-year amortization
** Line of credit based on interest rate of 9.25 per cent interest payments only


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How to select a Mortgage Expert for your renovation needs!

Money Matters: How to select a Mortgage Expert for your renovation needs!

As seen in Metro Vancouver Home Decor & Renovations.

Although many Mortgage Experts (including banks) offer only basic services, there are others that will analyze your entire financial requirements to develop a strategy to help you qualify for the right mortgage, using all their resources.

Mortgages for construction or renovations.

When you are looking for a construction or renovation renovations_pageloan you need to work with someone that understands the construction process and has extensive real estate experience. It is important they are going to be there to oversee the funding from the start to the end of the project to ensure the draws are paid on a timely manner and they are in constant contact with the lender throughout the project. There are different options to finance a renovation such as mortgage financing, home equity lines of credit, purchase/ refinance plus improvement programs, alternative lending and other non-banking solutions. Sometimes the client thinks that because of their long term relationship with their bank, they will get the best financing options. That’s not the case!

Before you engage the services of a Mortgage Expert.

As Mortgage & Leasing Experts, we know all the information the client provides is personal and confidential and we strongly recommend for the client to always verify the identification of the person they are going to work with. This can be achieved by doing the following:

  • Visit their web site and co101-a-helping-handnfirm the services they offer.
  • Ensure the Mortgage Expert works for a reputable company.
  • Verify that they have an active license and are registered with the government of BC (For verification click here and click under sub-brokers).
  • Confirm that the location of their office where they work.
  • Read testimonials from their clients on their web site.
  • Unless someone referred you to the Mortgage Expert, make an appointment to meet them in person before you give them any confidential information, this will give you peace of mind and you will know how this person will handle your personal information. It is important to meet the Mortgage Expert in person and that they don’t deal with you only via phone. Even though it might be more convenient.

From the initial contact, the client will realize the type of service the Mortgage Expert is going to provide. Remember this person is going to be a guide and support for obtaining the financing to purchase the greatest investments of their life.


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Red Flags for Contractor Fraud

With summer just around the corner, many homeowners are thinking about fixing up or remodelling their homes, it’s always wise to educate yourself on signs of contractor fraud to ensure you don’t end up paying for work that never gets completed.

Following are five red flags that may indicate a contractor is not legitimate:

  1. The company does not list a number in the phone book. This may indicate a fly-by-night operation that will be here today and gone tomorrow. They may seem legitimate in the beginning but, as soon as you make your first payment for the job, they may vanish.
  2. Asks you to pay for the entire job up front. This contractor will be long gone well before your project gets underway. Or, worse yet, the contractor may have started the project, leaving you with a ripped up home and depleted funds.
  3. Only accepts cash. A legitimate business should have the appropriate financial accounts in place to accept a variety of payment options from clients, including personal cheques and credit cards. If a contractor only accepts cash, you probably won’t see them again once they receive a payment.
  4. Solicits door-to-door or telemarketers. Most legitimate contractors find enough work through word-of-mouth referrals and advertising. If they need to drum up business by going door to door, they probably are not an established, local operation. Chances are this contractor is running a fly-by-night business.
  5. Offers exceptionally long guarantees. The contractor may be making promises that can’t be kept solely to sucker you into hiring them for the job. The contractor could be inexperienced or may be running a fly-by-night business.

The best way to protect yourself from contractor fraud is to seek referrals from people you trust who can vouch for the contractor including friends, family, colleagues or your mortgage broker or real estate professional. Also, you could select a contractor that belongs to an association such as the Greater Vancouver Home Builder’s Association.

It’s also important to read and understand every word of a contract before signing it. If you don’t understand something, ask for clarification.

Also keep in mind that you should never sign a contract with a service professional who makes promises that sound too good to be true. Chances are, this contractor needs to create these incentives to attract customers. If that’s the case, the contractor’s record can’t speak for itself.

Be especially wary of contractors who try to scare you into signing for repairs that they say are “urgent”. Before agreeing to any additional costly repairs, seek a second opinion.

If you’re thinking of embarking upon some home improvements, feel free to call to discuss your financing options.