Do you buy stocks, mutual funds or even Canada Savings Bonds without first investigating the potential for profit? Most people consider possible returns when putting money into investments that may generate taxable profit. However, why do so many Canadian homeowners invest money in our greatest tax-free opportunity -- our home -- without checking on returns beforehand?

Canadians receive an income tax exemption on the profit, or capital gain, they make when they sell their home (which Revenue Canada refers to as the principal residence). This tax break is often ignored by homeowners when they spend money maintaining and renovating their house, semi, townhouse, condominium...

Before you dive into home renovations, rebuild a garage or overhaul your garden this summer, stop for a minute and think income tax.

Too many homeowners spend time and money indulging personal whims, experimenting with do-it-yourself remedies or lavishing pricy improvements on their home without checking with local real estate professionals to find out whether the planned home improvements will add or subtract home value. Often these same homeowners are upset with Realtors who later show them real estate sales data that prove they will probably not get out all the money they put into their home.

Since the profit you make on your home is income tax free, it is worth a few precautions to be sure you'll benefit financially from the time and money you invest in your home. This means learning the difference between cost and value when it comes to your home. That is, the money that you spend on your home does not automatically translate into an equivalent increase in value to a buyer. Your local Realtor will usually not charge you to do the research involved in determining what buyers value in your neigbourhood. Here's a few tips to get you started:

Published: July 13, 1999

Use of this article without permission is a violation of federal copyright laws.

Strategist and Futurist is The Catalyst -- intent on "Helping The Best Get Better." An internationally-recognized "new retirement" authority, PJ's research, writing and speaking programs focus on decisions Baby Boomers face to achieve a successful future. Author of 6 books, PJ knows that, since home is headquarters for the "new retirement," professionals and consumers need relevant knowledge and insights, along with solid decision-making skills, to protect and enhance this private oasis. As The Catalyst, PJ provides strategic communication, client appreciation and advanced education services to the financial, tourism, lifestyle and service sectors -- and the clients they serve. A frequently quoted financial and business commentator, PJ is a thought-provoking strategic speaker who offers practical, real-life suggestions on leaving "the box" behind and embracing Forward Thinking -- a talent she regularly demonstrates in this column. For more, visit TheCatalyst.com.