Home improvement is a popular way to add value to your house. It also improves your comfort and enjoyment of your home, and it can reduce your utility bills. However, be careful not to overspend and make changes that may not pay off when it comes time to sell your house. A good rule of thumb is to make sure that your improvements are at least as high as the value of your home.
If you’re thinking of renovating, talk to a real estate professional before you spend any money. They can tell you what upgrades are worth your while. Also, if you’re going to be selling your house soon, it’s smart to check with your home insurance agent to ensure that your policy is up to date and covers the value of your new renovations.
According to a recent report, spending on home improvement has risen more than 50 percent since hitting a low during the recession. Aging homeowners are a large part of the reason, with 25 percent of all home renovation spending coming from those aged 55 and over.
The most common home improvement projects include painting, resurfacing of pavement and driveways, deck construction and fence construction. Also included in the list of home improvements are energy-efficient appliances, new insulation and a new roof.
These types of projects tend to provide the highest ROI, but other less costly improvements can add just as much to your home’s value. Replacing the front door is a relatively inexpensive upgrade that can boost curb appeal and, according to the Cost vs. Value Report, earns a 72 percent return on investment. Other affordable improvements include updating shower areas and replacing vanities and toilets with more energy-efficient models.
Another popular project is adding an additional bedroom or bathroom. These upgrades can add value to your home and give you more living space, which is especially useful if you have children or live alone and would like to move into a smaller house.
Other less expensive projects that can add a lot to your home’s value are installing a smart thermostat and adding a sprinkler system. The former can help you save on your energy bills and the latter can increase the value of your property by making it more attractive to potential buyers, says Gordon.
Before tackling any home improvement projects, make sure to research the definition of “home improvement” in your state’s tax code. There are two types of home improvement deductions: deductions and credits. Deductions decrease your taxable income while credits increase the amount of taxes you have to pay. Also, be sure to choose a reputable contractor and get a written contract before any work begins. This should include a payment schedule, as well as the specifics of what work will be done and what materials are being used. This will prevent you from getting ripped off by unscrupulous contractors. The contract should also specify the amount of time the work will take to complete and any inspections or certificates of occupancy that must be obtained before you receive your final payment.