Smart Ways to Spend Your Refund at Home
This year, it may be wise to invest your tax refund into what is most likely your top asset: your home.
Last year, the average IRS tax refund was about $3,000. You could use that money to pay bills or make overdue purchases, but also consider investing your refund in your home. The housing market ended 2012 on a good note. Home values were up 5.9%, according to research by real estate site Zillow.com, and they’re forecasted to appreciate 3.3% in 2013. At the same time, total home sales are at the highest they’ve been in five years.
Also See: Where’s My Tax Refund
Whether you’re looking to sell your home soon for top dollar or just add some value, small inexpensive repairs can go a long way. I tapped real estate experts Kathy Braddock and Paul Purcell for easy repairs and upgrades that will add the most value to your home.
Stage to Sell
If you’re house is currently on the market, Braddock suggests using your refund to stage it. Plant flowers, rent furniture and make other small fixes to a few key areas of the home to help it sell faster. She says the cost to hire a professional to stage a midsize family home can be around $3,000 – just within your budget. What’s more – a Duke University study found that a house on the market is better off furnished, rather than bare. It’s more welcoming and lets potential buyers to imagine really being at home in the space.
Go For a Facelift
If you’re not selling immediately, Braddock suggests small fixes. “If you do a full renovation now and sell in five years, your renovation could become be outdated,” she says. Instead, use your $3,000 for new appliances for the kitchen, a new paint job or flooring. Also consider re-staining or painting tired cabinets and replacing dated hardware. You’ll get the biggest bang from the kitchen and bathroom, areas that comprise much of a home’s value. According to estimates, you can expect to recoup between 70% to 80% of kitchen remodel.
Find the Right Contractor
Bigger jobs will mean a bigger return on your investment. Improvements like updating counters, installing a new bathroom vanity and glazing your tub will add real value to your home, according to Braddock. You may be tempted to do these jobs yourself, if you’re not handy splurging on professional help can be money well spent. Installing a custom closet is a great example. It a big job that will add to the value of your space. A DIY system costs between $150 and $600, but spend $1,200 to $3,000 for a professional contractor and you’ll have more assurance that there will be no costly mistakes down the line. For most renovations, one way to save on hiring a contractor is reaching out to your real estate broker. Realty professions are great resources for home-related referrals and often have relationships that can earn you a discount.
Splurge on Spring Cleaning
This is an area where you can certainly DIY with few mistakes. “Do what you can yourself,” says Purcell. “It’s free and sometimes the best thing you can do for your home.” But if you lack the time or need assistance consider hiring a cleaning service for an average $150 that will give your home a one-time, top-down cleaning. A smart move may be to have hardwood floors stripped and waxed for $0.35 -$0.55 per square foot. Or rent a carpet cleaner for as little as $25.
Photo Courtesy: 401(k) 2012
