To move or not to move - that is the question

Can you survive a reno? Many homeowners wrestle with that big question: Is it better to find a new home that’s larger, better equipped and more suited to your needs, or renovate the one you’re already living in?

---

“It’s a fundamental and personal choice about location, needs, lifestyle and preference,” says Chartered Accountant Darryl Teutenberg, a Partner with Durward Jones Barkwell & Company LLP in St. Catharines. “But a home is also most people’s biggest asset. You want to protect your investment, and get at least something back when it comes time to sell.” Chartered Accountant Sam Zuk, a Partner with Soberman LLP in Toronto is himself a three-time renovation survivor. “Even the best renovation is a challenge,” he laughs. “The old saying about it costing twice as much as you think and taking twice as long is all too true. “First, make sure the money you put into renovating is supported by neighbourhood value,” he continues. “You may think you’re upgrading for your personal enjoyment, but no one really expects to walk away from that kind of investment. On the plus side, if your property value increases, it can be a good tax shelter because capital gains aren’t triggered when you sell your principal residence.” Sometimes, it’s circumstances. “Career opportunities can be a big incentive to move to a new house or even new area,” remarks Teutenberg. “If that’s the case, there can be some important tax savings.” If you’re moving at least 40 kilometres closer to a new job, you can deduct not only the cost of the move, but things like storage costs, transportation, legal and notarial fees, and even meals and accommodation during the move itself. “But consider that a move to a new community can be particularly stressful for children,” Teutenberg cautions. “It means new schools, activities, doctors and dentists. And if you have a child with special needs, services may not be as available in a new community, especially if you’re farther away from an urban centre.” Whether you opt for new digs or decide to build on your existing foundation, be prepared for a different attitude when you try to arrange financing. “You can get anything you want,” says Zuk. “The issue is how much will it cost? It can be easier to get financing on a new home, because the value is pretty much assured.” But funding a reno may be a whole other ball game. You don’t know what’s behind the drywall nor if there’s asbestos in the attic, so Zuk advises that it’s very important to have your ducks in a row before you even approach your banker. “If you have enough equity in the home, you may qualify for a first mortgage or a line of credit to cover it,” he says. ”But the bank will probably want to evaluate the property, and charge you to do it. “If you don’t have enough equity, getting financing may be more difficult, even if renovations will increase the value of the property. Don’t overlook penalties, either. If your first mortgage is not due for a few years, the lender may let you cancel it and refinance the whole thing to avoid a second mortgage.” Whether you buy new or upgrade what you have, both Teutenberg and Zuk say it’s important to prepare for some upheaval in your life… and your finances. You may have to settle for a little less than your one-hundred-per-cent-perfect home. But with patience, realistic planning and the help of experienced and trusted professionals – Chartered Accountants, lawyers, realtors and contractors – you can come very close to getting the home of your dreams.