This year, spring has me itching to start doing things to my house. I bought an old character house almost two years ago now. And while it was lovingly restored and well taken care of by the lovely former owner, there is still much work to be done.
Priority one for me is the kitchen. It's not a bad size and it definitely has its charm with kitschy handles and charming wainscoting. But counter and cupboard space is at a premium. The original narrow cupboards don't accommodate some of my plates, my food is all crammed into another cupboard and my very limited counter space is piled high with stuff, so it always looks like a mess.
After a winter of trying to keep it tidy and searching for space saving options, I am thinking about renovating. I am in the very initial stages of my plans, but it's got me thinking. A kitchen renovation isn't a cheap thing. Friends of mine recently renovated their kitchen and while it looks absolutely beautiful, it cost a small fortune. Do I want to get into that? And if I do a renovation, will it pay me back when it comes to re-sale?
Fortunately, kitchens are one of the best things to renovate. According to a Royal LePage Renovations and Returns Survey, renovating a kitchen gives you one of the best returns on your investment (ROI). While you may spend $12,000 to $15,000 or much more depending on your budget, the approximate ROI is 75 to 100 per cent.
Renovating a bathroom is another good investment. Spend $5,000 to $8,000 or more and the return on your investment is again about 75 to 100 per cent of the cost. The biggest return is when you add a bathroom on the main floor. Invest under $5,000 to put in another bathroom on the main floor and you can recoup 80 to 100 per cent of your costs.
While those are all projects that may require some help, there are many renovations and home improvements that you can do yourself, which also pay back a good return. The top "do it yourself" renovations, which can be done for under $5,000, include replacing knobs and hardware, which can garner a return of 75 to 100 per cent and installing new light fixtures which could return 60 to 70 per cent of your costs. Painting the interior is another wise investment and can return as much as 50 to 100 per cent of your investment. Replacing carpets with affordable laminate or hardwood, updating your entryway and building a fence or deck can all generate an ROI of 50 to 75 per cent.
With the federal government's new tax incentive for home renovations, more Canadians are planning to renovate this year. According to home improvement superstore Lowe's, a U.S. company that is slowly entering the Canadian market, one in five Canadians is more likely to renovate thanks to the new Home Renovation Tax Credit.
The program provides a one-year, temporary 15 per cent income tax credit on eligible home renovation expenses for work performed, or goods acquired, from Jan. 27, 2009 to Feb. 1, 2010. The credit can be claimed on expenditures of more than $1,000 but not more than $10,000.
Remodelling a kitchen or finishing a basement, building a deck or fence, putting in new carpets or flooring, painting and installing a new furnace or hot water heater all qualify as eligible expenses under the Home Renovation Tax Credit. Talk about an incentive. Accordingly, about 47 per cent of Canadians surveyed say they plan to renovate in the next year, with two-thirds of them planning to spend up to $5,000 on home renovations.
If you're thinking about renovating and wondering what your return on investment might be, the Appraisal Institute of Canada has developed a very cool, online tool. Called RENOVA, it's an interactive web-based guide to the value of home improvements. Designed to give consumers a better idea of the return on investment they can expect for a variety of home improvements, RENOVA gives you a payback value range derived from the cost of the improvement. You can find RENOVA online at www.aicanada.ca.
So how does RENOVA work? You simply input what you're thinking about spending on a particular renovation. Then RENOVA will provide you with a payback amount in a range for that specific renovation. You can choose from one of the top 20 most popular home renovations.
I put RENOVA to the test with my own kitchen renovation idea. I would consider spending about $10,000, which may seem low but I'm only planning to replace the cupboards and countertops and add one new bank of cupboards. Using that $10,000 budget, RENOVA calculated that the return on my investment would be anywhere from 75 to 100 per cent. Spending $10,000 could give me a return of between $7,500 and $10,000.
Not bad. It's definitely worth considering, especially now when mortgage rates and other lending rates are so low. I think it's time to hit those home renovation stores and start shopping! Not that I really need more than a nudge to go shopping... Stay tuned and if I do decide to renovate, I'll keep you posted.
