“If there is an incentive like that it could encourage homeowners to renovate and potentially refinance,” Gord McCallum
of First Foundation told MortgageBrokerNews.ca. “It won’t hurt the refinance business, and that’s the type of business a lot of brokers are going after these days.”
The Conservative government has plans to implement a program that offers owners a 15 per cent tax refund on renovations up to $5,000 if they are re-elected. A timeframe for that program has not yet been established.
Some critics, however, believe the proposed credit will encourage owners to renovate instead of sell their homes – and shrink the pool of potential clients for broker originations outside of refis.
“There will be the same number of buyers trying to compete for a smaller number of homes that are available on the market,” Realtor Ahmed Helmi with Royal LePage told the Financial Post.
For his part, however, Ad Lakhanpal of Mortgage Alliance
argues homeowners looking to sell may also take advantage.
“Homeowners often choose to do renovations to sell their homes for a higher price and make it more desirable,” he told MortgageBrokerNews.ca.
Still, a tax break for renovations could encourage homeowners to take out refinance loans to take advantage, which would mean a lucrative income stream for brokers.
A similar tax credit was introduced in 2009 with the intention of stimulating the economy, but that incentive offered a 15 per cent rebate on renovations up to $10,000.
But Lakhanpal doesn’t believe the current proposed plan will have the same effect.
“Are the renovators starving for business?” he said. “Contractors are so busy and they have so much work as it is.”
The resurrected home renovation tax credit being promoted by the federal Conservatives could stimulate the refinance market, according to one broker.