It’s a new era for the basement. What was once considered the cold, dark underbelly of the house is being made over into a warm and functional space in a growing number of homes these days.

Recessionary times and fewer vacations mean many families are looking to make their basement a place to unwind, especially for their children, says Frank Turco, colour, trend and design manager at The Home Depot.

“Because there are so many people staying at home, there’s definitely a resurgence back to the rec room,” he says. “People are investing in making basement spaces more comfortable living spaces ... There’s usually a living room, sometimes an entertainment centre combined.”

Walkouts leading into the yard are another hot trend in basement design. “People are really looking to embrace the indoors and bring them outside, and also bring the elements of the outdoors in,” says Turco.

If you’re looking to perk up your basement, start with a well-thought-out design plan, says Jason Labelle of the Ottawa-based renovation company Dalton Corporation.

A top concern is making sure there is enough cold air return. “Basically, your basement is always colder than the rest of the house,” says Labelle. “People tend to forget about how important it is to have cold air return and to have the furnace circulating the air through continuously.”

Other important issues include improving lighting, keeping out moisture and ensuring you have the proper permits, says Labelle.

In addition, look into what expenditures are eligible for the Home Renovation Tax Credit, which was introduced earlier this year. Upgrading the insulation, installing new carpeting or flooring, painting and cost of labour are among those that qualify.

Remember to keep your receipts. You will be able to claim the credit on your 2009 income tax return.

But while the HRTC is a great incentive, it shouldn’t take precedence over good financial planning, says Patricia Lovett-Reid, senior vice-president of TD Waterhouse and host of BNN’s MoneyTalk.

“Don’t let the tax credit drive your decisions — it should enhance your decision,” she says. “Sometimes people can go broke saving money.”

To that end, be savvy in deciding whether to take the do-it-yourself route when updating your basement. “To the extent that you can renovate on your own, great — but also know when you need to bring in the experts,” says Lovett-Reid. “You’ll save a lot of money having the job done right the first time.”