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Does home remodeling pay off?
Home » Home Remodeling » Home Remodeling » Does home remodeling pay off?One of the smartest investment opportunities is home improvement and it is often overlooked. Home improvement research shows that nearly one million homes a year undergo a major remodeling project involving a replacement or addition. Quality windows and doors are two areas that can have a substantial impact in this area.
Investing in home improvement has become a popular method of enhancing the lifestyle of homeowners. When preparing to begin a home improvement project, here are a few simple questions to ask to help ensure that the home improvement project is a good investment:
Am I remodeling to stay or move? It costs about 10 percent of a home’s current value to sell and move. If you enjoy your neighborhood and school system, it may be better to reinvest that 10 percent into home improvements. If moving is a must, keep your project simple. A fresh coat of paint can have the biggest impact on the resale value of your property and is a less-expensive way to make the property visually appealing.
Will my home remodeling increase the property value? Some improvements will increase the value and others will not. Valuable improvements include additions to living space or improvements to bedrooms, bathrooms and kitchens. Swimming pools and tennis courts do not add as much to the value of a home.
How much money should I invest in home improvements? Whether you stay or move, avoid over-improving. Investing too much can make your home more valuable than the value of the neighborhood. There are a variety of products that are attractive and cost-effective. Your home’s value should be no more than 20 percent above the average.
What if my remodeling project costs more than I am capable of investing? Recent changes in tax laws allow home equity to be used for home improvement. If rates are low, mortgage refinancing may be a way to finance your home remodeling project.
Will improvements increase the tax basis of my home? When selling a home, the gain is determined by deducting your basis from the net income. Be sure to save records of all capital improvements made. Capital improvements do not include maintenance or repairs.
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