Mandatory energy audits another part of the latest Dalton McGuinty budget has been a hot topic for debate lately. As part of the new Green Energy Act McGuinty is proposing that homeowners have a mandatory home energy audit done that could cost anywhere between $300 – $500 before they sell their London, ON house. McGuinty feels that “Forcing people to conduct audits is a good idea because it will allow buyers to know their energy costs. When it comes to buying the single most expensive thing that youʼre likely to buy during the course of your lifetime- a home-youʼre entitled to know what kinds of cots youʼre going to incur when it comes to energy.”

Holes in the Logic

Critics believe that there are a couple key holes in McGuintyʼs logic. Some critics feel that this is just another poorly timed cash grab. The Association of Ontario says that the additional cost will hurt homeowners in what are increasingly difficult economic times. Gerry Weir president of the Ontario Real Estate Association said “The results of audits will be used by home buyers as bargaining chips to to significantly reduce the final selling price. Home sellers are already worried about lost equity in their homes. A move like this, which will reduce their value even further, will not help them in any way.”

Comparing Apples to Apples

Another major issue with the Audit that the Realtors association points out is that there is no one standard for energy audit and no regulation auditors. This debunks one of McGuintyʼs major reasons for a mandatory audit is that the government “wants to make sure that you can compare one house to another on an apple to apple basis.” If there is no standard for audits then what is the real difference between the audits and the buyers using previous heating & hydro bills to estimate future energy costs.

I think the Ontario Association of Realtors is right buyers will use audit as a major bargaining chip to reduce purchase prices. People will look at the audits results and will probably see the recommendations as something wrong with the house instead of looking at the recommendations as changes that if were made would benefit the future owner over the long term because they will be the ones saving on the energy cost. The major problem with this idea is the mandatory part, once you attach the word mandatory to anything it automatically sheds a negative light on the issue. Solutions like the energy retro fit grant give major incentives for people to do work voluntarily giving them the benefit of saving money on the initial purchase and on the future energy costs.

Let us know what you think?

Yesterday the ontario government released the brand new budget that includes many changes in an attempt to stimulate the economy in Ontario. In this blog I want to explain some of the changes, give some opinions for and against the budget the and let you decide what you think about it. The Ontario government’s goal is to invest $34 billion over two years to stimulate the economy. This timely and targeted investment includes $32.5 billion in infrastructure spending and nearly $700 million in additional funding for skills training. The government is also proposing to accelerate the phase-in of the Ontario Child Benefit (OCB) two years ahead of schedule, increase social assistance rates and invest in social housing infrastructure. The Budget also proposes a comprehensive tax reform package that includes moving to a single, value added sales tax at a combined rate of 13 per cent on July 1, 2010. Over the next three years, the transitional cash payments as well as ongoing, permanent tax relief. Business taxes would also be cut by $4.5 billion over three years.

Budget Highlights

•The government is increasing funding for summer employment opportunities for youth to nearly $90 million, which would benefit more than 100,000 young people this summer, including youth in high need communities.

•The government is providing $ 400 million more in children’s benefit over the next three years, providing low- and middle-income families with up to $1,100 annually per child in Ontario Child Benefit payments starting this july, providing additional payments to 115,000 families.

•The government is providing $1.2 billion to renovate 50,000 social housing units and build 4,500 affordable housing units for low-income seniors and people with disabilities.

•Books, diapers, children’s clothing and footwear, children’s car seats and car booster seats, and feminine hygiene products would be exempt from the provincial portion of the single sales tax.

•Newly constructed homes under $400,000 would not be subject to an additional tax. Buyers of new homes valued between $400,000 and $500,000 could also claim a proportional rebate.

•A new Ontario property tax credit which would be based on occupancy cost- property tax paid or 20 percent of rent paid. A credit would be provided for occupancy cost of up to $250 for non-seniors or $625 for seniors, plus 10 per cent of occupancy cost. The credit would not exceed occupancy cost and would be subject to a maximum of $900 for non-seniors and $1,025 for seniors. It would be adjusted by two per cent of adjusted family net income over $20,000 for single people and over $25,000 for families. The property tax credit would be refundable and claimed on the personal income tax return, beginning with the 2010 return.

•Eligible families with an income of $160,000 or less would get three payments totalling $1,000 to help them adjust to the new single sales tax. Eligible single people with an income of $80,000 or less would get three payments totaling $300.

•The first benefit payment would arrive in June 2010, the second December 2010 and the third in June 2011.

•One of the most generous sales tax credits in Canada, providing low- and middle income Ontarians with a permanent refundable credit of up to $260 for each adult and child.

•$1.1 billion in income tax cuts, giving Ontario the lowest provincial tax rate in Canada for the first tax bracket.

•Cut the general Corporate Income Tax (CIT) rate 14 per cent to 12 per cent and reduce the rate to 10 per cent by 2013.

•Cut the CIT rate for small businesses from 5.5 per cent to 4.5 per cent.

•Cut the CIT rate for manufacturing and processing- helping businesses including farming, fishing, mining and logging from 12 per cent to 10 percent.

•Eliminate the CIT small business deduction surtax, making Ontario the only Canadian jurisdiction that would emlinate this barrier to growing small businesses.

•Exempt more small and medium-sized businesses from the Corporate Minimum Tax and cut the CMT rate from 4 per cent to 2.7 per cent.

I know that is alot of information but I felt it was important to give as much of the information as I could because there is a lot of benefits for a lot of different people. Now I would like to go over some of the comments being made for and against the budget. Ontario Finance Minister Dwight Ducan said in a statement yesterday “Through this Budget, the McGuinty government is helping families who are being hurt by the global economic crisis, but we’re doing much more than that. With our comprehensive tax reform, we’re making Ontario stronger and more competitive, and that will help our families and businesses when prosperity returns. This is the single most important thing we can do to create jobs and position our economy for future growth.” One major criticism of the budget is that it will put Ontario into the red for the next six years. Another thing critics are saying is that the changes, which will add tax to many items including gas prices, real estate purchases and other consumer items. With every budget and almost every politic  decision there is a trade off to money to one program or help a certain group money needs to come from somewhere that just a reality.

I think the biggest problem with this budget is the burden it will put on new home sales. In a year when new home starts are so low is it really the smartest decision to enforce and tax that will make it even more diffcult for people to buy new homes. When you really think about how many jobs going are dependent on the new housing market I think it is a bad move. Let us know what you think???

Effective Jan. 27, any Canadian who spends money on home renovations will be eligible to receive up to $1,350 in tax relief, thanks to the new Home Renovation Tax Credit proposed in the Government’s Economic Action Plan. Here we will outline exactly what is the HRTC and what types of products, services, and expenses are eligible.

The Home Renovation Tax Credit is one of several initiatives designed to help homeowners and homebuyers contained within the Government’s Economic Action Plan. Budget 2009 also announced $300 million over two years for homeowners looking to make their homes more energy efficient. This government is taking steps to help Canadians control their energy costs and keep more money in their pockets.

The Home Renovation Tax Credit will provide a one-year, temporary 15% income tax credit on eligible home renovation expenditures for work performed, or goods acquired, between January 27, 2009 and February 1, 2010. The credit may be claimed on eligible expenditures exceeding $1,000 but not more than $10,000.

Home renovations are smart investments in the long term value of a home and also create economic activity by increasing the demand for labour, building materials and other goods. Renovations can also reduce energy consumption and the long-term cost of owning a home. Every time Canadians invest in home renovations, they are helping to create construction and building-supplies jobs in their own communities. Providing an incentive for Canadians to invest in their homes, will encourage investment in local jobs.

What type of products, services and expenses are eligible?

Eligible Ineligible

-Renovating a kitchen, bathroom or

basement

-New carpet or hardwood floors

-Building an addition, deck, fence or retaining wall

-A new furnace or water heater

-Painting the interior or exterior of a house

-Laying new sod

-Labour costs;

-Professional fees;

-Building materials;

-Fixtures;

-Equipment rentals; and

-Permits

-Furniture and appliances (refrigerator, stove, couch)

-Purchases of tools

-Carpet cleaning

-Maintenance contracts (furnace cleaning, snow removal. lawncare. pool cleaning, etc.)

-Financing costs

What type of expenditures will not qualify?

The following expenditures will not be eligible for the HRTC:

i)the cost of routine repairs and maintenance normally performed on an annual or more frequent bias;

ii) expenditures that are not integral to the dwelling, and other indirect expenditures that retain a value independent of renovation

iii) expenditures for appliances and audio-visual electronics; and financing costs

Who is eligible to participate, and what are the conditions?

Family members (i.e. spouses or common-law partners and their children under 18) are subject to a single limit based on their pool expenditures. The credit is only available for a dwelling that is eligible to be the family principal residence or that of one or more of their other family members.

What should consumers do?

Begin to save your receipts for any home improvement project that you recurrently working on that qualify for the tax credit

How can I get more information?

Additional information on the Home Renovation Tax Credit will soon be available

on Canada Revenue Agency’s website at www.cra-arc.gc.ca

Information is also available at Department of Finance Canada at www.fin.gc.ca