6 Ways to Invest Your Refund in Your Home
Tax season is still months away, but it’s not too early to think about how you might use your tax refund. In fact, now is the time to consider reinvesting it. According to the IRS, the average refund in 2017 was $2,763—that’s more than enough to tackle a small- to mid-range home improvement project.
Here are six equity-building improvements you can easily complete by investing your tax refund.
This project is one that often gets put off because it’s expensive ($2,000-$4,000) and easy to overlook. Your tax refund is a great opportunity to keep your home’s exterior finish on your financial priority list without breaking the bank. A fresh layer of paint is not only an investment in curb appeal—it can also go a long way to protect your home from the elements.
While there is no hard and fast rule about how often you should repaint, most experts agree that a paint job can last anywhere from 3-10 years, depending on a number of factors. It’s an easy task to put off, but the longer you wait, the more damage can occur.
Stainless Steel Front Door
Replacing an old wooden front door with a new stainless steel door can yield one of the highest rates of ROI of any home renovation project. In fact, you could recoup more than 100% of your investment.
Installing a new door can also make your home significantly more energy efficient by creating a better seal to block out the outside weather, leading to lower heating and cooling costs.
Switching to Energy Star-rated windows can make your home significantly more energy efficient—for savings of up to $500 a year in heating and cooling costs. In addition, you could be eligible for rebates and tax incentives.
Making your home more energy efficient can also add significant value. According to a survey conducted by McGraw Hill, buyers will pay more for an energy efficient home.
Energy Star Appliances
Use your tax refund to purchase energy-efficient appliances for a great investment in lower energy bills. To determine which appliances you should replace, take a look at the kilowatt-hour usage of your current appliances, and compare them to the kilowatt-hour usage of newer appliances.
According to Energy Star, newer, more energy-efficient refrigerators alone use only about half the amount of energy as some older models.
Tankless Water Heater
While tankless water heaters are more expensive than conventional storage water heaters, they can save you money in the long run.
First, tankless water heaters last much longer—about 20 years, which is up to 10 years longer than most conventional water heaters last. In addition, tankless water heaters can be up to 34% more energy efficient than traditional water heaters, saving you up to $100 a year on utility costs, according to the Department of Energy.
Paying attention to the landscaping of your home is a great way to boost its value, make you feel good about where you live, and contribute to an overall neighborhood aesthetic. In fact, research shows that homes with sophisticated, well-designed landscaping are perceived to be 5-11% higher in value than similar homes without it.
Invest in foundation plants, curved flower beds, and colorful potted plants. And don’t underestimate the value of a green, well-tended lawn – if your grass is struggling, consider laying sod or planting plugs.
Home improvement spending often pays for itself in resale value. You’ll also reap the reward of enjoying new upgrades while residing in your home. Let your tax refund work for you starting with simple improvements to your home.
If you discover that you made an error on your tax return, you may need to file IRS Form 1040X, Amended U.S. Individual Income Tax Return. Learn more from H&R Block.
Understand your tax responsibilities when you receive nonemployee compensation. Read the IRS definition and get more insight from the experts at H&R Block.
The IRS has the authority to take or hold your tax refund if they think your return isn't accurate and in other situations as well. Find out more from the tax experts at H&R Block.
If you are filing U.S. personal income taxes, you will complete some variety of Form 1040. Learn more about Forms 1040, 1040A and 1040EZ with H&R Block.