Where do the tax credits and rebates go?

News Oct 29, 2009 Ancaster News

It was the attraction of tax credits, combined with additional federal and provincial rebates, that finally pushed me over the top in the long, drawn-out decision to replace the heating and air conditioning system in my home.

When my wife and I bought our little 1,600 square-foot palace on the west Mountain a few years ago, we realized that the 25-year-old, inefficient Keeprite furnace and air conditioner would need to be replaced within a few years.

I’ve never had to purchase a new heating and air conditioning system, so imagine my surprise when the first estimate came in at just over $11,000.

Pardon?

Oh, and if I agreed to have the system installed the next day, the prospective supplier would knock off an additional $600. How sweet of them. Where do I sign?

The thought of spending that kind of money really sent me into a state of depression. I’m an extremely frugal individual and struggle Brett Favre-like in making decisions, especially ones involving large monetary purchases.

Not to mention I don’t have a spare 10 grand sitting around. Not many of us do.

I called around to some people I know in the home building industry, and asked them what they pay for a furnace and air system in a brand new home.

“I can tell you our price to install everything including ducts in a new bungalow would be about $5,800 (with a 1.5 ton A/C),” wrote one friend.

That price is fairly consistent with what I’ve heard over the years.

I asked another custom home builder the same question the other day.

“About $2,800 for a furnace, another $2,000 for an A/C,” he told me.

So why was I being quoted $11,000?

Knowing the system had to be replaced, and wanting to take advantage of the available rebates, I kept shopping around.

We finally settled on a top-end, high-efficiency Carrier furnace and high-efficiency Carrier air conditioner and a total price tag of $9,000 all in. They both come with extended warranties and service packages.

The company we used also threw in free duct cleaning, and paid for the Eco tests that must be completed in order to apply for rebates.

When all is said and done, and we receive the Eco rebates and Home Renovation Tax Credit from the government, the total cost will be about $5,400.

So the math works out like this — $9,000 becomes $5,400 meaning all the rebates and tax credits actually go into the pocket of the heating and air company.

I suspect this formula is being applied across the home renovation industry. Basically, companies are jacking up the price of everything, then dazzling consumers with the lure of tax credits and rebates.

At the end of the day, the price the consumer pays is pretty much the same as it was four or five years ago when there weren’t any government-sponsored incentives. Only difference is, today, the businesses pocket the tax credits and rebates. I have no problem with this, I just think it needs to be clear where the money is going.

I believe the Harper government brought in the Home Renovation Tax Credit as a measure to battle the underground economy. Instead of under-the-table cash renovation deals, consumers now need receipts in order to apply for the tax credit. That means more taxes for government coffers.

It may seem like a good time to invest in your home, but at the end of the day, I don’t think there are any great deals out there.

However, the illusion has certainly been a great stimulus for the economy.

Now I just have to pay off that line of credit.

Where do the tax credits and rebates go?

News Oct 29, 2009 Ancaster News

It was the attraction of tax credits, combined with additional federal and provincial rebates, that finally pushed me over the top in the long, drawn-out decision to replace the heating and air conditioning system in my home.

When my wife and I bought our little 1,600 square-foot palace on the west Mountain a few years ago, we realized that the 25-year-old, inefficient Keeprite furnace and air conditioner would need to be replaced within a few years.

I’ve never had to purchase a new heating and air conditioning system, so imagine my surprise when the first estimate came in at just over $11,000.

Pardon?

Oh, and if I agreed to have the system installed the next day, the prospective supplier would knock off an additional $600. How sweet of them. Where do I sign?

The thought of spending that kind of money really sent me into a state of depression. I’m an extremely frugal individual and struggle Brett Favre-like in making decisions, especially ones involving large monetary purchases.

Not to mention I don’t have a spare 10 grand sitting around. Not many of us do.

I called around to some people I know in the home building industry, and asked them what they pay for a furnace and air system in a brand new home.

“I can tell you our price to install everything including ducts in a new bungalow would be about $5,800 (with a 1.5 ton A/C),” wrote one friend.

That price is fairly consistent with what I’ve heard over the years.

I asked another custom home builder the same question the other day.

“About $2,800 for a furnace, another $2,000 for an A/C,” he told me.

So why was I being quoted $11,000?

Knowing the system had to be replaced, and wanting to take advantage of the available rebates, I kept shopping around.

We finally settled on a top-end, high-efficiency Carrier furnace and high-efficiency Carrier air conditioner and a total price tag of $9,000 all in. They both come with extended warranties and service packages.

The company we used also threw in free duct cleaning, and paid for the Eco tests that must be completed in order to apply for rebates.

When all is said and done, and we receive the Eco rebates and Home Renovation Tax Credit from the government, the total cost will be about $5,400.

So the math works out like this — $9,000 becomes $5,400 meaning all the rebates and tax credits actually go into the pocket of the heating and air company.

I suspect this formula is being applied across the home renovation industry. Basically, companies are jacking up the price of everything, then dazzling consumers with the lure of tax credits and rebates.

At the end of the day, the price the consumer pays is pretty much the same as it was four or five years ago when there weren’t any government-sponsored incentives. Only difference is, today, the businesses pocket the tax credits and rebates. I have no problem with this, I just think it needs to be clear where the money is going.

I believe the Harper government brought in the Home Renovation Tax Credit as a measure to battle the underground economy. Instead of under-the-table cash renovation deals, consumers now need receipts in order to apply for the tax credit. That means more taxes for government coffers.

It may seem like a good time to invest in your home, but at the end of the day, I don’t think there are any great deals out there.

However, the illusion has certainly been a great stimulus for the economy.

Now I just have to pay off that line of credit.

Where do the tax credits and rebates go?

News Oct 29, 2009 Ancaster News

It was the attraction of tax credits, combined with additional federal and provincial rebates, that finally pushed me over the top in the long, drawn-out decision to replace the heating and air conditioning system in my home.

When my wife and I bought our little 1,600 square-foot palace on the west Mountain a few years ago, we realized that the 25-year-old, inefficient Keeprite furnace and air conditioner would need to be replaced within a few years.

I’ve never had to purchase a new heating and air conditioning system, so imagine my surprise when the first estimate came in at just over $11,000.

Pardon?

Oh, and if I agreed to have the system installed the next day, the prospective supplier would knock off an additional $600. How sweet of them. Where do I sign?

The thought of spending that kind of money really sent me into a state of depression. I’m an extremely frugal individual and struggle Brett Favre-like in making decisions, especially ones involving large monetary purchases.

Not to mention I don’t have a spare 10 grand sitting around. Not many of us do.

I called around to some people I know in the home building industry, and asked them what they pay for a furnace and air system in a brand new home.

“I can tell you our price to install everything including ducts in a new bungalow would be about $5,800 (with a 1.5 ton A/C),” wrote one friend.

That price is fairly consistent with what I’ve heard over the years.

I asked another custom home builder the same question the other day.

“About $2,800 for a furnace, another $2,000 for an A/C,” he told me.

So why was I being quoted $11,000?

Knowing the system had to be replaced, and wanting to take advantage of the available rebates, I kept shopping around.

We finally settled on a top-end, high-efficiency Carrier furnace and high-efficiency Carrier air conditioner and a total price tag of $9,000 all in. They both come with extended warranties and service packages.

The company we used also threw in free duct cleaning, and paid for the Eco tests that must be completed in order to apply for rebates.

When all is said and done, and we receive the Eco rebates and Home Renovation Tax Credit from the government, the total cost will be about $5,400.

So the math works out like this — $9,000 becomes $5,400 meaning all the rebates and tax credits actually go into the pocket of the heating and air company.

I suspect this formula is being applied across the home renovation industry. Basically, companies are jacking up the price of everything, then dazzling consumers with the lure of tax credits and rebates.

At the end of the day, the price the consumer pays is pretty much the same as it was four or five years ago when there weren’t any government-sponsored incentives. Only difference is, today, the businesses pocket the tax credits and rebates. I have no problem with this, I just think it needs to be clear where the money is going.

I believe the Harper government brought in the Home Renovation Tax Credit as a measure to battle the underground economy. Instead of under-the-table cash renovation deals, consumers now need receipts in order to apply for the tax credit. That means more taxes for government coffers.

It may seem like a good time to invest in your home, but at the end of the day, I don’t think there are any great deals out there.

However, the illusion has certainly been a great stimulus for the economy.

Now I just have to pay off that line of credit.