Home improvement refers to the remodeling, altering, painting, renovating, repairing, and modernizing of residential or noncommercial property. It also includes the installation of additions or other structures on a residential or noncommercial property, such as driveways, decks, fences, and solar heating or water systems.
Home improvements are often a priority for homeowners who want to upgrade their living spaces, add a new feature, or improve energy efficiency. However, not all projects deliver a good return on investment (ROI). Some renovations may even reduce the resale value of your property. So, it’s important to think through any upgrades before you get started.
Some popular home improvement projects include sparkling bathroom overhauls and adding a master suite. But, these renovations don’t always add enough value to offset the cost of materials and labor. Instead, look for midrange upgrades that are more likely to appeal to a wide range of buyers. For example, replacing dated kitchen appliances with stainless steel units and installing quartz countertops can be less expensive than upgrading to top-of-the-line finishes.
Those who plan to sell their homes in the near future should consult with real estate professionals before pursuing high-end upgrades. These renovations may not be attractive to a potential buyer, and they can even deter some interested parties from making an offer. A home recording studio, for instance, might not appeal to a young family and could drive down the price of your property.
If you are a homeowner, you should be aware that any money spent on home improvements can affect your tax bill. While you can’t deduct the amount you spend on a project in the year you make it, you can subtract your capital costs from your cost basis when you sell your house.
According to a recent report by The Real Estate Witch, the number of American households that have undertaken some form of home improvement in the past five years has skyrocketed. But, many of these projects haven’t added much value to the property, leaving owners with debt and an unfinished project.
One way to avoid going into debt is to save up for the project upfront. If this isn’t an option, consider a credit card with a 0% APR introductory period for 12 months or more, which can give you time to pay off the balance without interest.
Another option is to borrow against the equity in your home through a personal loan or a home equity line of credit. These loans are typically repaid over 5-30 years via fixed monthly payments. However, these loans can’t exceed 85% of the current market value of your home and come with closing fees and other costs. Before borrowing against your home’s equity, consult with a financial advisor to make sure you understand the risks and benefits of this type of financing. Then, talk to your insurance agent to ensure your policy covers the value of any upgrades.