Did you know that, according to a HomeStars survey, almost three-quarters (74%) of Canadian homeowners planned on improving their homes in 2021?
Many Canadians have transitioned to fully remote work, meaning they’re spending more time enjoying their homes — no doubt coming across rooms and features that need sprucing up. HomeStars found that 54% of homeowners were planning on improving their outdoor space this year, with 29% citing that they want to better enjoy the space. Other top renovation projects include bathrooms (32%), kitchens (23%), basements (17%), and appliance repair/replacement (12%).
Another big reason why Canadians are renovating? The desire to age in place. 79% of respondents said they are planning on staying in their homes as they continue to age, and 50% said they were renovating to ensure they could do so.
And while the recent rush to renovate even caused lumber shortages/price increases, homeowners have been sprucing up their homes for decades — and they’ll continue to do so into the future.
And one of the biggest considerations before taking on a home renovation project? The cost. Let’s break down the costs, and what you need to know before calling a contractor — or picking up a hammer yourself!
Be sure to check out our How To Finance Home Renovations article for getting your project off the ground!
What to consider before home renovations
When it comes to considering and planning a home renovation, the biggest tools in your toolbox are going to be research, organization, and, crucially, budgeting + figuring out your finances.
Simply put, it’s all about planning and taking the process step by step. To get a better idea of what’s involved if you’re looking to do it right, the Canadian Home Builders’ Association has detailed the essential home renovation steps on their site.
Take your time
The first thing to keep in mind is that simply because you saw the idea at a neighbour’s house, on Pinterest, or on HGTV, it doesn’t mean that you should jump right to it. When you take the time to think it through, it might be completely wrong for your own space or would hurt resale chances.
The research, planning, designing, budgeting stages are crucial. Make sure you’re renovating for the right reasons – not just to follow a trend or because you’re planning on selling. Remember: renovations don’t always mean a dollar-for-dollar return on investment! As long as you’re honest about your expectations and what you can realistically afford, you’re on the right track.
It also helps to plan ahead if you can. If you’re a homeowner, certain home projects are likely going to come up no matter what — roof or window replacement, worn-down flooring, or a new paint job. Open and regularly fund a TFSA to make sure you’re at least partially prepared to absorb costs for both unexpected and planned home repairs or renovations.
Saving up ahead of time is the best way to ensure you’ll stay on budget. You worked hard for that money! If you’re coming up short and need to start renovations ASAP, consider a home equity line of credit (HELOC) or research any municipal, provincial, or federal rebates.
Renovation vs. Remodel: What’s the difference?
Sure, these terms might sound similar, and you might even use them interchangeably. In reality, you’re looking at three different types of projects. Let’s define each one, so you can determine which avenue is best for your house and your goals.
This type of project makes sure the room’s intended purpose stays the same. For example, the kitchen stays a kitchen, but repairs or a ‘freshening up’ is done. This includes painting or wallpapering, trim work, new flooring, and/or replacing fixtures like lights or cabinet knobs. Surprisingly, structural rebuilding can even fall under this banner, so long as the room stays the same.
With a renovation, the keyword is ‘revive.’ The room is made more attractive or modern, and is personalized to your tastes and lifestyle.
Bonus: Renovation projects are more DIY-friendly! Of course, there are some projects where an expert hand is absolutely the route you should take — electrical, plumbing, and any of the aforementioned structural work comes to mind! — but some jobs are totally DIY-able if you’re comfortable with it.
Home retrofitting is another home improvement category, done with energy efficiency and the environment in mind. It falls under the banner of home renovations because it typically involves projects like replacing windows, sealing air leaks, fixing heating/cooling systems, and insulation work.
In May 2021, the federal government announced a new Canada Greener Homes Grant, designed to help Canadians make these energy-saving changes. A total of 700,000 grants of up to $5,000 have been made available to help facilitate these retrofit initiatives
Now, the keyword with remodeling is ‘structural.’ If you’re changing the look and layout of a room, and not just updating it, then you’re entering remodel territory. Examples could be if you want to knock down a wall to make your space more open-concept or add a small bathroom to your basement. You might even choose to remodel if your home has traces of bad original design that was in place before strict building codes.
You’re altering the floor plan or changing the purpose of a space, so you’ve got a remodel on your hands. Note: if extensive remodeling is needed, then it’d be wise to at least consider a complete teardown and rebuild.
Finally, it’s important to also consider what type of home you have, and any kind of neighborhood association or board. There might be strict limits on what you can renovate or remodel. This is especially true with condo units. Be sure to consult with your property manager if you have any questions about what is or isn’t allowed in your specific building.
Which costs more?
With remodeling, you’re altering a layout. This means more complex work like rewiring or plumbing is likely involved. As a result, remodeling is typically going to be a more expensive route than renovation. It’s a place where a professional is probably the best person for the job. Renovations don’t typically require any permits, whereas remodels almost always do.
If you’ve ever put a house on the market, you might’ve given your bedrooms a fresh coat of paint or changed some dinged-up closet doors. Homeowners typically turn to renovations because they want to give the value of their home a boost within a smaller budget.
Ultimately, projects should be looked at on a case-by-case basis.
A good place to start when thinking about a renovation budget? Try thinking about how long you’d like to live in your current home. Short-term? Go for the more “cosmetic” updates that freshen up the space and improve its curb appeal. These less expensive jobs give you a better chance to recoup your investment.
Can you renovate a heritage home?
Calling all you fans of the popular Instagram account @CheapOldHouses!
If you purchased a fixer-upper historical home (either a designated heritage home or simply a very old house!), you’re probably looking to keep its vintage spirit. In this case, home restoration is the process where the home’s features are recreated in the name of authenticity and replication. Modern utilities (eg. alarms or A/C) are still installed but carefully tucked away. Some examples include replicating or sourcing antique light fixtures or hiring an expert to do a careful cleaning of original floors.
Home restoration is a process that’ll require more planning and research — and probably more professionals! It’s also worth noting that a designated historic home might come with specific rules that dictate what you can and cannot do to the property. Drastic changes to modernize the home? It’s almost a given this won’t be allowed!
What is the average cost to renovate a home?
For starters, CIBC’s 2019 Home Renovation Poll found that of those planning renovations over the subsequent 12 months, the average planned spend was $10,211.
When looking at averages and estimates, it’s best to break it down by room type. After all, most homeowners will only tackle one room at a time. Keep in mind that the estimated costs listed below are averages. Every home is different! The actual cost of your home renovation will depend on a variety of factors, including:
- The age of your house
- The size of your house
- The labour you’re hiring — or not (i.e. licensed contractor vs local handyman vs DIY)
- How complex the renovation plans are
- How fast you’d like the work done (eg. If you plan on selling soon, stick to small projects)
- The quality of fixtures or finish
- Expenses like fees, permits, appraisals, and an extra emergency stash of cash for sudden expenses
Let’s dive in.
Renovation estimates by room or part of house
Sources: HomeStars, contractor Bryan Baeumler for HGTV, and the Appraisal Institute of Canada
Did you know: kitchen renovations have the largest ROI payoff and ability to boost a property’s resale value? According to HomeStars, depending on your renovation you can expect about 75-100% ROI. The Appraisal Institute of Canada suggests spending roughly 10-15% of your home’s value on a kitchen renovation.
On average, HomeStars reports, kitchen renovations cost about $30,944 or $195 per square foot. According to Bryan Baeumler, they can cost anywhere from $15,000-50,000.
Bathroom updates are typically a good investment. According to HomeStar, the average bathroom renovation costs approximately $13,393. Most homeowners spend between $7,785 and $19,338, and experts suggest you budget up to 5% of the value of your home for this type of job.
If you’re updating the look of a bedroom, Baeumler estimates renovation costs between $5,000 and $10,000. “While the primary bedroom is a big feature in any home,” he adds, “I would suggest not breaking the budget on this room, as there are other spaces within the home that can greater increase your ROI and can better increase the value of the home.”
Now, these can be (potentially) really big jobs! Since it’s a basement, you’ll have to consider drywall, insulation, flooring, lighting, and moisture-proofing. According to Baeumler, a basement averaging 1,000 sq. ft would be in the $10-15,000 range if you DIY it. To bring in a pro, it’ll be approximately $20-25,000 or more.
Even better, basement renovations usually add value to your home, with an average recovery rate of 50-75%.
Living room renovation
These renovations are typically cosmetic, and cost about $5,000-$12,000, explains Baeumler. A full gut job? That’ll be around $100 per square foot.
Miscellaneous renovations and updates (via HomeStar):
- Landscaping: Homeowners estimate spending roughly between $1,809 and $6,901 for individual projects, and just over $17,000 on their entire landscape. A common rule of thumb? Expect to spend about 5-10% of your home’s overall value on landscaping.
- Flooring: The average cost range is between $1,963 and $5,806. The average price reported by homeowners is $3,836.
- Roofing: The average cost to install an asphalt roof is around $4,750. For a metal roof that’ll last about 4x longer, that price jumps to $10,365.
- Painting: An average sized room (10 x 12 will cost approximately $500 to $1040 for a painter, not including ceilings, trim, or the cost of paint.
How do you budget for home renovations?
A typical rule of thumb is to budget at least 1% of the home’s purchase price every year for maintenance. For example, if you purchased a home for $400,000, you should set aside a minimum of $4,000 annually for upkeep and repairs. As we mentioned above, keep this money in a separate account like a TFSA or High-Interest Savings Account (HISA). You’ll be glad you did when it comes time to do necessary home improvements!
Remember: keep your home’s resale value in mind.
Calculating home renovation costs
As the National Bank of Canada explains, there are two ways of calculating the cost of your renovations.
- The square foot method, which calculates the cost of your selected materials against the number of square feet being renovated. This method is actually better for approximation purposes: as the number of square feet increases, the cost per square foot decreases.
- The full-cost method, which takes into account the professionals you’ll need to hire, plus materials needed. This method is best in the hands of a qualified estimator, who can give an accurate appraisal.
The biggest thing to remember is to be realistic. You might think “that won’t take too long” or “I don’t need to make a detailed plan.” Listen to expert opinions on how long a project might take, and make a plan that you’ll stick to.
Can I claim home renovations on my taxes in Canada?
There are no blanket home renovation tax credits available to all Canadians. There are some situations/jurisdictions, however, where you can apply for a federal or provincial tax credit. Most of these are for Canadians who are 65+ or persons with disabilities (any age) and apply to a primary residence.
Home Accessibility Tax Credit
On a federal level, the non-refundable Home Accessibility Tax Credit is for seniors 65+ (at the end of the particular tax year) and taxpayers with a valid Disability Tax Credit Certificate. Those who qualify under these parameters apply for the credit directly. If you’re a support person for someone who qualifies, then you might be able to claim this credit on their behalf. If you qualify, you can claim up to $10,000 in expenses for renovations that improve accessibility and safety. Many of these renovations also qualify as medical expenses, and you can actually claim them as both. Given that some provinces also offer similar credits, you can potentially claim these expenses up to three times on one return.
Types of projects that qualify include:
- Grab bars and safety rails
- Wheelchair lifts
- Widening your doorway
- Installing ramps (indoor and outdoor)
- Lowering cabinets
- Step- or walk-in bathtubs
Also included as expenses are materials, fixtures, plans, permits, and professional labour to complete the renovations. For all the details on eligible expenses for the HATC, visit the Canada Revenue Agency.
GST/HST new housing rebate
The name makes it seem that it only applies when purchasing a new home, but “substantially renovated” homes actually do qualify. You could be eligible for a new housing rebate for some of the GST/HST paid if you:
Constructed or substantially renovated your own home or hired someone else to construct or substantially renovate your home for use as your (or your relation’s) primary place of residence, if the fair market value of the house when the construction is substantially completed is less than $450,000.
Provincial tax credits
British Columbia, Ontario, and New Brunswick all have their own versions of the Home Accessibility Tax Credit, and they all share similarities to the federal credit. BC’s tax credit is, however, the only one that includes persons with disabilities:
- Home Renovation Tax Credit for Seniors and Persons With Disabilities (BC)
- Seniors’ Home Safety Tax Credit (ON)
- New Brunswick Seniors’ Home Renovation Tax Credit
In Manitoba, residents can get a Green Energy Equipment Tax Credit if they install a new geothermal or solar heating system.
Quebec residents who renovate the wastewater treatment system of their primary residence (or in special circumstances, their cottage) with a qualified contractor, can apply for a tax credit. This particular credit only applies to 2017 through 2022.
Finally, Saskatchewan’s Home Renovation Tax Credit allows residents to save up to $2,100 in provincial income tax by claiming a 10.5% tax credit on up to $20,000 of eligible home renovation expenses. This credit will come to an end on December 31, 2022.
Note: If you’re eligible for any of these tax credits, don’t forget to hang on to any receipts!
What home renovations add the most value to your home?
According to the Appraisal Institute of Canada, these are the top 5 renovations with the highest return on investment:
- Kitchen renovations or updates
- Bathroom renovations or updates
- Repainting the interior and/or exterior of your home (in tones with wide-ranging market appeal)
- Updating décor (eg. lighting and plumbing fixtures, counter tops, replacing worn vinyl/carpets, or refinishing hardwood floors)
Renovations that do not have such a great ROI? Extravagant landscaping, spa-style showers, and swimming pools. After all, wouldn’t you want to enjoy these yourself instead of installing them before moving out?
Recommended reading: the Appraisal Institute of Canada’s How To Value Your Renovations guide
Should I renovate before selling?
One of the biggest things to watch for is over-improvement. (Yes, it’s a thing and it’s very possible!)
When you’re planning a renovation, think about where you live and what potential buyers might expect of your neighbourhood. They might not be looking for a swimming pool or a wine cellar! An example is given by the Appraisal Institute: it might not provide the best ROI to spend $65,000 to renovate a basement in an area where homes typically don’t exceed $200,000.
This part of the planning process would greatly benefit from the objective advice and expertise of a professional appraiser.
How long do home renovations take?
Timelines will vary depending on factors similar to those needed to figure out the actual cost of your home renovation (see above). Project type, materials needed, and the complexity of the job are all to be considered. That said, to give you a broad idea, Ontario-based Inspire Homes has outlined both their typical design/planning time and construction time:
- A small project (eg. a small bathroom or kitchen “remove and replace” jobs that are essentially just updates) would take approximately one month to plan and design. They estimate a standard bathroom renovation to be about 2 weeks of construction, and 3-4 weeks for a kitchen.
- A medium project (eg. a mid-size kitchen, larger bathroom, or a room where the floor plan is changed and fixtures moved around) has a typical design and planning time of 2-3 months. They estimate a bathroom renovation with plumbing relocated and tub to shower conversion would take 3+ weeks, and a kitchen job on this scale at 8+ weeks.
- Large renovation projects(eg. whole-house renovations or a second storey addition) take about 6-12 months to design and get permits in place.
Remember: these are just one set of examples from one company. Your project might take less or more time!
Do I need home insurance for renovations?
You’ll likely already have home insurance before undertaking home renovations, but it’s important that you review your policy before undertaking any projects. Upgrades and general maintenance can help you lower your liability risk, and they can also affect your home insurance coverage. As a result, you should get in touch with your insurance broker to discuss how these changes align with your coverage. One example of this is that home renovations can change your home’s value, and as a result, its replacement value in your coverage.
As always, make sure you have all proper permits required by your municipality, and keep all records/receipts. Any questions related to home renovations and your insurance coverage should be directed to your insurance broker.
What home renovations require permits?
As mentioned above, some renovations don’t actually require a permit. Remodeling, however, is a different story. Layout changes will almost always need a permit.
Municipalities have a wide range of permit requirements and fees, so be sure to consult your local building department for details. At the very least, you’ll need to provide detailed information and plans. Here are links to departments for select Canadian cities:
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