In recent years, the average tax refund has totaled about $2,700. If you’re fortunate enough to get back that much from the IRS, then consider investing your tax refund in your home.
Why invest a tax refund in your home instead of, say, a tropical getaway? Because your home is probably your biggest asset, so it pays to take care of it—literally. Home improvements ranging from storm windows to tankless water heaters can increase your comfort and enjoyment, and add to your home’s value.
1. A tankless task
If you’re like most homeowners, you probably don’t care how your water gets heated, so long as it’s hot when you turn on the shower. Fair enough. But your water heater deserves closer attention, especially if it’s more than a decade old. That’s when conventional storage-tank water heaters tend to fail, leaving you with a wet mess.
You can replace your water heater with a standard storage-tank model for between $250 to $600. Installation can add between $700 to $2,000. High-efficiency heat pump and solar models cost more. Better yet, spend between $1,150 and $2,500, including installation, on a gas tankless water heater. It takes up half the space, lasts twice as long, and will save the typical homeowner about $80 a year on utility bills. Buy certain approved water heaters to take advantage of a federal energy tax credit that’ll reimburse you up to $500.
2. Think pink
A few rolls of that familiar pink fiberglass insulation could save you a lot of green. In cold climates like the Northeast, getting an attic up to recommended insulation levels could lower energy bills by $600 a year. Blown-in cellulose or fiberglass insulation can work equally well, depending on your attic. Consult a qualified contractor.
Figure you’ll pay a contractor between $1,000 and $2,500 to insulate your attic. Costs vary based on square footage, attic accessibility, where you live, and insulation type. Add insulation and qualify for a federal energy tax credit worth up to $500. The tax credit excludes installation, so ask your contractor to separate materials cost and labor cost on your invoice.
3. No pane, no gain
Replacement windows offer a lot to homeowners: energy efficiency, aesthetic appeal, low maintenance, and high resale value. Unfortunately, those benefits come with a steep price tag. High-efficiency replacement windows that qualify for a federal energy tax credit cost between $500 and $1,000 apiece installed, so you’re looking at spending $10,000 or more to outfit a typical home.
Budget-minded homeowners can get similar energy savings—15% to 40% off heating and cooling bills—at a much lower price by opting instead for storm windows. Storm windows, which work in conjunction with existing windows to lower energy consumption, cost between $100 and $300 each installed. Adding storm windows to a typical house takes a day or two, vs. two to three days for replacement windows.
4. Give your garage a facelift
Homes with prominent garages can benefit greatly from a curb-appeal standpoint from the addition of new garage doors. Standard doors usually come in wood or steel. It costs between $550 and $1,650, including installation, for a single door. A double door runs between $800 and $2,500. Custom garage doors cost more, as do heavy-duty aluminum doors.
5. Emergency power to the people
A blizzard sweeps in, the lights go out, and you’re left with no heat until the utility company can fix downed power lines. Estimated wait time for repairs: two days. What’s a resourceful home owner to do? Crank up the portable generator, that’s what.
Portable generators cost between $500 for a 3-kilowatt model to $2,000 for a 10-kilowatt model. Larger units should be able to power a heater, some lights, the refrigerator, and a few other essentials for as long as you can keep the generator supplied with gasoline. A pricier alternative is a permanent standby generator that’s hard-wired to your home’s electric grid. Standby generators start at around $4,000 to $5,000, though prices can escalate quickly.