Home improvement projects can add significant value to your home, and don’t necessarily have to be expensive or complicated. Whether you want to improve the look of your home or add extra square footage, there are numerous projects that will fit any budget. These projects can also increase the value of your home, not only for you but also for future buyers.
Cost of home improvement
Home improvements cost a lot of money and nearly half of homeowners struggle to pay for them. In addition to figuring out how much it will cost, 47 percent also have trouble finding the time to do them. Recent research from the National Association of Home Builders shows that the average cost of a home improvement project is around $10,600. But it varies greatly based on the type of project, the material used and the location.
There are several factors to consider before hiring a contractor for your home improvement project. For example, larger projects usually require more materials than smaller ones. A roofing project, for instance, costs significantly more than a simple shed. Using an estimate from Homewyse can help you set a budget and compare different options.
Cost vs. value report
Zonda, a housing market research company, recently released the Cost vs. Value Report for home improvement projects. This report compares the cost and resale value of 22 popular remodeling projects. In this year’s report, exterior home projects saw the highest ROI. However, material costs rose for framing lumber and decking.
While the report does take into account cost, it also takes into account subjective factors, which may affect the resale value of a home. For example, a project requiring a $1000 door handle may not add much to the overall value of the home.
Tax implications of home improvement projects
If you’re planning to invest in a home improvement project, it’s vital to understand the tax implications of that project. A major question that arises is whether your project is a capital improvement. While repairs and restoration work can be included in the cost basis of a home, repairs that restore the structure to its original condition aren’t considered improvements.
Home improvements that add value and extend the life of a home are deductible. If you’re planning to sell your home in the future, permanent improvements can boost its resale value. These improvements aren’t tax deductible in the year you make them, but you can write them off over time. These upgrades can range from adding a swimming pool to installing a home security system. A new HVAC system, solar water heater, or septic tank may also qualify for a tax break. If you use your home for business, you can also depreciate the property and claim tax breaks for it.
Getting a home improvement loan
There are several different types of loans available for home improvement projects. You can find loans that do not require credit checks, but it is important to know what they require before you apply. Many of these loans have high interest rates and can put you in debt. It is also important to understand that a home improvement loan does not pause your other debt payments.
The equity you have in your home can play a big role in securing a home improvement loan. To determine this value, check out the current market value of your home and subtract your mortgage balance. If your budget is limited, consider reworking your plans and stagger the projects to reduce your financial risk.