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Featured Issue: Project Selection
There are two important factors to consider when selecting the best remodeling project for your situation. The answers to the following questions will help you to assess your options and make good decisions.
1. How long do you plan to be in your home?
For instance, if the project you have in mind is based on having decided to make major improvements that will make the house more livable, rather than move anytime soon, your comfort is probably at least as valuable as recouping the cost of the remodel.
If, on the other hand, you expect to move within the next year and are making improvements with re-sale in mind, you definitely want to be sure to make the types of improvements that will increase your home's value as much a possible. Certain projects return more than others at re-sale in specific areas, so doing your homeowner on local cost-value trends is worth the small amount of effort it takes. (See Successful Remodel Resources)
2. Made Any Capital Improvements Lately?
Some of the most fiscally-advisable improvements homeowners can make are what Uncle Sam calls 'capital improvements'. These are types of projects that enhance the life expectancy or the value of your home. Capital improvements have the added benefit of reducing your capital gains tax bite when you sell your home, by raising its so-called 'basis'.
It's important to understand, however, that normal repair and maintenance jobs don't qualify as 'capital improvements', although many other upgrades, such as a new roof, built-in appliances, or a new heating and cooling system, do. Even insulation; a new deck, garage, addition; swimming pool; porch; or fencing fit the definition.
Save All Receipts
In order to take advantage of the tax value of these remodeling projects, however, it's critical to save every receipt or cancelled check for work done. Be sure to maintain all home repair and improvement receipts in a safe place and be able to locate the file at the time of sale.
For more information and useful links for both of above topics, go to Successful Remodel Resources.
To proceed to the next step of Recipe for a Successful Remodel, go to Budget Setting and Financing.