Our homes are our sanctuaries and not just a mere roof over our heads protecting us from the elements. Our homes our also our single biggest investment and one of our most cherished dreams or desires. The condition and the overall environment of our home, influence our life on a daily basis. Home improvement remodeling in Michigan can help us improve our home environment while improving its market value.
If you decide to opt for renovating your home, then you need to be prepared to consider that home improvement remodeling are both part of the same process. While home repairs at a still small level make your environment safe and comfortable, home improvements, remodeling and renovations are more complicated.
There are a few factors, which can help you, determine if you should opt for remodeling of your home or not. One main factor that can influence your decision is the duration of time you intend to stay in the house. If you intend to stay in your home for more than a decade, then you need to figure out how the home improvements will improve your lifestyle and add to your comfort. If the duration of stay in shorter, then you need to consider the impact of home improvement remodeling in Michigan on the resale value of your real estate.
What you need to remember while considering renovation is the value addition it will make in terms of comfort, and day-to-day enjoyment of the home during the time that you continue to live in the house.
In addition to your comfort, you will also be able to increase the amount your house is worth. Take into consideration that the money you might expend to remodel your house will also increase its value, so it is always a good idea to remodel.
By: George Christodoulou
Posts Tagged ‘Resale Value’
Home Improvement Remodeling In Michigan
May 22nd, 2010The Tax Implications of Home Improvements
February 19th, 2010
In the United States, certain “qualified” home improvements may reduce your tax bite when it’s time to sell your house and some could allow you to take an immediate tax credit, but some of those same improvements could also raise your property tax bill by triggering a reassessment of your property’s value.
Fortunately, a property tax increase caused by a home improvement is typically outweighed by your increase in equity, higher resale value and possibly a reduced tax bite – not to mention your enjoyment of the improvements.
Capital Improvements
Capital improvements are those home improvements that may ultimately help reduce your taxes.
Qualifying improvements are improvements that increase your home’s overall value or prolong the life of the structure. That includes: insulation, new heating and/or cooling systems, a fence, a driveway, adding a garage or carport, adding a new room(s), additions, a swimming pool, landscaping, a porch or a deck, built-in appliances, a new roof, etc.
Repairs, maintenance and upkeep typically don’t qualify as a capital improvements. These include such things as: plastering, painting, wallpapering, replacing broken or cracked tiles, fixing minor leaks, patching your roof, repairing broken windows, and so on.
The moral of the story is; whenever possible, replace instead of repairing because capital improvements increase the homeowner’s cost basis in the residence and may reduce taxes.
(To get more information about what is considered a capital improvement see U.S. Internal Revenue Service Publication 523 “Selling Your Home” and the publication’s correction, “Notice 1221.”)
Your Cost Basis
The cost basis of your home is used in the calculation to figure your capital gains tax. It isn’t as simple as subtracting the sale price from the purchase price.
You first start with the original purchase price, add your closing costs, add any fees for title insurance and/or legal services, and the like. Loan acquisition costs cannot be included. Then add the cost of “qualified” home improvements.
Any insurance proceeds received for theft, storm damage, and other casualty losses would be subtracted, then any costs to rebuild or replace would be added back. You also must subtract any deferred gain from previously owned houses and subtract allowed depreciation for any portion of the property that was used and claimed for business purposes. The net result is your new or adjusted cost basis.
To determine the taxes, subtract the adjusted cost basis from the sales price, as well as selling costs (real estate commissions, legal fees, etc.).
Provided they are completed within 90 days of your sale and provided they were completed to make the home more saleable items otherwise considered repairs (such as wallpapering, painting, planting flowers, maintenance, etc.) can also be classified as selling costs. So from a tax perspective this is a good time to perform those repairs.
The difference between the adjusted cost basis and the sales price is your capital gain of which $250,000 ($500,000 for joint filers) is currently excluded from taxes.
Home Energy Efficiency Improvement Tax Credits
Consumers who purchase and install specific products in the home, such as windows that are energy-efficient, roofs, insulation, doors, and heating and cooling equipment can receive a tax credit of up to $500 beginning January 2006.
The legislation providing these credits, known as EPACT, also provides a credit equal to 30% of qualifying expenditures for the purchase of qualified photovoltaic property and for solar water heating property used exclusively for purposes other than heating swimming pools and hot tubs. The maximum credit is $2000.
Improvements must be installed in or on the taxpayer’s principal residence in the United States. Home improvement tax credits apply for improvements made between January 1, 2006 and December 31, 2007. Recently, a bill has been submitted to extend this program.
As always, check with your accountant to see how these regulations and any new changes in the code may affect you.
By: Shawn Meldrum
How Should I Spend My Home Improvement Budget
January 10th, 2010
How should I spend my home-improvement budget? – It seems now days everyone has an interest in home improvement, just flip through cable TV channels and you will probably find a home improvement show to watch. It is not hard to understand why home owners are interested in home improvement, the right improvements can increase a homes value tremendously and give the home more enjoyability to the home owners. The question that always seems to pop up is “how do i spend my home improvement budget?”
The average American will move every 4-6 years so always take resale value and home appeal into account when planning any home improvement project. People all have varying tastes so avoid doing anything to extreme that may hurt resale value and is to difficult to undo, but it is your home so express yourself just keep it within reason.
No matter where you live a kitchen or bathroom remodel will add the most value and appeal to your home. These are expensive projects to undertake and many bathroom and kitchen remodels will cost over $10,000. Although small cosmetic improvements like faucet upgrades and new cabinet hardware can increase the appeal of a kitchen and bathroom for little money.
New flooring is also a nice home improvement that adds value, however new carpet will not add as much as value and appeal as adding hardwood floors will. Many of todays laminate hardwood floors can be installed DIY by the homeowner relatively easily. If you are unsure how to install hardwood flooring check with your local home improvement store, many offer classes on hardwood floor installation.
Not all home improvement projects have to be expensive or large to make a difference. Some smaller projects can include improving or adding landscaping, interior and exterior painting, resealing a driveway and upgrading lighting fixtures. These are small projects that can be done in a weekend or a few hours. These home improvements all will add curb appeal and increase the value of your home at the same time.
The things you will want to avoid are adding items that require maintenance and ongoing expense such as hot tubs, saunas and swimming pools. While one of these items may appeal to you they may not appeal to a large percentage of buyers and will not increase your homes value by much, in fact they may cause your home to sit on the market longer if you ever decide to sell A swimming pool is a good example of a negative home improvement , swimming pools require additional homeowners insurance due to liability for injury/death, they are expensive and complicated to maintain and can be dangerous to small children and some pets.
With the proper planning and research spending your home improvement budget correctly is an easy task to accomplish. By using the Internet, television shows and your local home improvement stores as references and you are almost guaranteed to choose the right improvement for your home.
By: Darin Sewell