Besides the usual fixes around the home, you can also make some changes to your property. Home improvement, otherwise known as home renovation or remodeling, can involve various projects that improve the interior or exterior of a home. These can be done for a variety of reasons including aesthetic reasons, tax deductions, and to improve the value of the property. But before you begin any project, you should know what you want to accomplish. Below, you can find a few tips to get started.
Cost of renovations
The costs of home renovations vary greatly depending on the size of the room and the complexity of the project. Materials such as appliances, cabinets, flooring, and tile are expensive, and supply chain challenges can add to the cost. While it is not always necessary to replace everything, renovating a kitchen or bathroom can add significant value to a home. However, the expense of major renovations can be comparable to the cost of moving into a larger home.
The average cost for a three-bedroom home renovation is around $25,000, and a four-bedroom home renovation may run as much as $180,000, depending on the scope and options. The average cost for room additions varies from approximately $20 to $200 per square foot. Per-square-foot price ranges from $18,000 to more than $25,000 in expensive regions. If you plan to resell the renovated home, consider the current market value to determine the cost of the renovations.
Tax deductions for energy-efficient renovations
Making your home more energy efficient may qualify for tax deductions on your 2021 taxes. For example, if you install solar panels, solar water heaters, or fuel cell property, you could claim up to $500 in tax breaks. These deductions are known as tax credits, and you’ll need a professional’s help to determine which products are eligible. Some of these credits are refundable, too, so they’re worth the time and effort.
To claim the tax deduction, make sure to install Energy Star windows in your home. These windows will reduce your utility bills by as much as 40%. This tax credit only applies to improvements in your principal residence. You can use the credit only if you make energy-efficient changes in your home, not rental properties. Make sure you list all of the qualifying improvements before filing your taxes, and be sure to inform your accountant.
Loan options for home improvement
A home equity line of credit or home equity loan are two popular loan options for home improvement. These loans provide a borrower with a fixed loan amount and revolving line of credit. Both options use the homeowner’s home as collateral. However, if the homeowner does not have enough equity in the home to pay for the improvement, traditional lenders may turn them down. If you have equity in your home, you should check with your lender to see what your options are.
A HELOC is a line of credit, like a credit card, that offers a flexible line of credit. A HELOC differs from a home equity loan in several ways. For example, HELOC loans fluctuate in interest rates, but there are usually no closing costs. Another alternative is a personal loan, which is unsecured and does not require home equity as collateral. A personal loan allows you to borrow cash against your home at a fixed interest rate with no restrictions on what you can spend it on. In addition, personal loans usually have a fixed repayment period.
Many states require contractors to be licensed in order to perform certain types of home improvement projects. This is especially true for large scale projects. A contractor must have a license to complete work on homes valued over $5,000. Some states require a license for specific types of work, such as installing swimming pools. In addition, contractors in Alaska must also take a course in Arctic engineering or pass the Alaska Craftsman Home Program to obtain a license. Lastly, home improvement contractors in Arizona must also have separate licenses for commercial and residential work.
Regardless of how much work is involved in a home improvement project, it is necessary to hire a licensed contractor to complete the work. If the contractor is a corporation, they must obtain a license for one of its officers. Individual contractors should also have a license in their name. While some counties allow contractors to transfer licenses, the licensing authority will need to approve the assignment. Contractor licensing for home improvement is crucial to the quality of work.