How To Use Your Tax Refund To Increase Your Home’s Value
Most people dread the thought of
gathering their tax information but for homeowners there can often be some good
news. Your home isn’t just a place where you hang your hat and create
your memories; it’s often a nifty tax savings that can net you a nice refund.
The average tax refund last year was just under $3,000. If you are expecting a refund check you may want to take some
of that money and put it toward home improvements that can really pay off.
If you have just a few hundred dollars to spend think basic maintenance. If you are planning to sell soon and want to make sure things are sparkling clean you can rent a pressure washer to clean the house, walkways and patios. Or you could put the money toward paint and freshen up your home’s interior or exterior. Landscaping is another way to add to curb appeal without spending a lot. If there has been a task you’ve been dreading such as cleaning out your gutters or trimming trees you can hire someone to take that task off your hands.
Another way to use your money to save money in the future is to consider energy saving improvements such as adding weatherstripping, installing insulation, or putting in a smart thermostat such as Nest.
You can do a lot with a little. Even $100 can be enough to give your bathroom a whole new look.
With a larger refund you can either do a lot of little projects or consider one major purchase. In addition to painting and sprucing up you could also make some cosmetic fixes. Think lighting–add dimmer switches, install new lighting fixtures or replace existing overhead lighting with fans that also have lighting included.
If you are looking for a single purchase consider a new Energy Star appliance. Not only will you get a new appliance you could also get credit toward next year’s tax bill. While most home improvements are not tax deductible there are federal tax credits for purchasing green improvements. MSN Money reports that this is generally 10% of cost up to a total of $500. This can include water heaters, furnaces, heat pumps, insulation and more. Check out the Energy Star tax credit page for specific details.
If you have a larger refund you may want to consider a larger project such as replacing some of your doors and windows. The National Association of Realtors and Remodeling magazine found that installing a steel entry door has a cost of $1,137 with a resale value of $974.
Another investment that can pay off well when it comes time to resell your home is to consider updating your flooring. Depending on your part of the country, adding hardwood floors or refinishing existing ones can contribute to your home’s resale value.
If you have are among the lucky recipients of a larger refund it might be worth it to concentrate on a single room. Depending on how large your refund is and how much more money you are interested in adding in on the project, this might be the time to either repurpose existing space, add on, or remodel. Kitchens and bathrooms are always favorite rooms for updates, and for good reason. The 2011-2012 Cost vs. Value survey from Remodeling Magazine showed that a minor kitchen remodel of just under $20,000 had a cost recoup rate of over 72%.
No matter how you choose to spend your money make sure to keep good records and hold onto your receipts. Having a designated folder, either online or offline that catalogs all your repairs and improvements can come in handy both at tax time next year or when you do decide to sell and want to tally up all the work you have done on the home.