Reinvesting in Your Home: Tax Refunds & Credits
Reinvesting In Your Home
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With tax season upon us, spending money on home improvement projects may be the last thing on our minds. However, the average tax refund for families is over $2,000, and that money may be put to good use by reinvesting it in your home. Additionally, new tax credits are available for energy-efficient heating/cooling, roofing and windows projects.
Tax Refunds: Invest and Save
A good way to reinvest is in updates that will also save you money in the long run. Replacing old windows with double-paned, energy-efficient ones will cut down on heating and cooling bills. New windows can be $300-$700 apiece, making a full replacement project $3,000 or more, but the investment should be repaid in savings on utility bills and the increase in the home's value.
Another way to invest in a project that will also save money is to update or replace an inefficient furnace, air conditioning unit, or heat pump. Your tax refund may not cover the entire cost of replacing the system, but it could certainly take a big bite out of the total cost.
Replacing your entire roof may not be an option, but replacing damaged shingles or tiles can be within the budget of a tax refund project. Do-it-yourself projects with asphalt shingles cost about $600, but calling in a professional to update a wood, tile, or slate roof is a good option too.
New siding will save money by providing extra insulation and will update the look of the home, adding resale value. Vinyl siding costs about $1 per foot for do-it-yourself projects. Having new vinyl siding professionally installed will cost approximately $7 per foot. On average, vinyl siding installation projects may cost between $3,000-$12,000.
Several home improvement projects qualify for up to a 30% tax credit, with a cap of $1,500 per household in 2009 & 2010. These include replacing current windows and doors with Energy Star products—a great way to save on heating/cooling bills. New types of energy efficient roofing made out of metal or asphalt also qualify for the 30% credit; new insulation and heating/cooling systems qualify as well.
These improvements have a cap of a $1,500 credit per household, but some projects do not have the cap, and homeowners can receive the 30% credit on the entire cost of the project. These are typically larger home improvements, like geothermal heat pumps, solar panels, small wind energy turbines, or state-of-the-art fuel cells.
Check Your Tax Credit Eligibility
Be sure to check the Energy Star tax credit page to ensure your project qualifies for credits, as there are efficiency and cost guidelines.
Reinvesting in Your Home: The Bottom Line
Home improvement projects are always desirable, and now there are ways to make them more affordable. Between your tax refund and new tax credits included with the stimulus package, now is a good time to start that home improvement project you've always been considering.