Home improvement is more than just slapping on new paint. People renovate their homes for a number of reasons, including making it more comfortable or increasing the resale value. But jumping into a project without a budget and plan can quickly turn into a money pit.
Many of the categories seeing the biggest spikes in spending on home improvements this year are outside projects, like building decks or putting up fences, Anderson says. He attributes this to rock-bottom interest rates and a growing population of older homeowners who can afford to pay for these projects.
In general, you can expect to recoup about 70 percent of the costs on these types of projects, according to home remodeling loans platform RenoFi. That’s not to say that you won’t be able to make more than that, but it does mean that it’s not always guaranteed.
If you’re thinking about renovating your home, start by getting some expert advice. The best way to do this is by working with a designer, who can help you find ways to improve your space and avoid expensive mistakes. You can find qualified designers online or through real estate websites, and they typically charge a low hourly fee.
It’s also important to consider the tax benefits of a particular renovation. Capital improvements, such as installing a new bathroom, can be deducted from your taxes at the time of sale. Repairs, however, are not tax deductible. Make sure you speak to your tax professional before taking out a loan for your home improvement project.