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HOME IMPROVEMENT: Home Improvement Growth Latches Onto Housing Recovery

Remodeling is rebounding and it's about time.

Just as the sales-driven housing recovery is bringing home the equity bacon for many underwater homeowners, home improvements can further boost home values and help sustain both the housing recovery and economic growth.

Spending on home improvements increased 9 percent in 2012, the first increase since 2007, according to the Joint Center for Housing (JCH) Studies at Harvard University.

When housing crashed in the late 2000s, so did the home improvement sector, leaving in its wake some 2.4 million so-called "inadequate homes."

These properties were likely converted to rentals or nonresidential use, became vacant or were permanently erased from the housing inventory, JCH says.

"With the US economy and housing market now recovering, investment in the nation's housing inventory is also picking up. Lenders and new owners are rehabilitating millions of foreclosed properties. Older homeowners are retrofitting their homes to accommodate their future needs... And with the huge echo-boom population moving into the home buying market over the coming decade, the remodeling industry can look to an even more promising future," the JCH report found.

The National Association of the Remodeling Industry (NARI) says property owners are feeling more secure about their economic future, according to its fourth quarter 2012 Remodeling Business Pulse Data.

Many property owners are using home improvements to increase their home's value, improve salability and enhance their investment in their home, but others are catching up on deferred maintenance, repairs and upgrades.

"Remodelers are indicating major growth in the future, with many saying that clients are feeling more stable in their financial future and their employment situations; therefore, they are spending more freely on remodeling needs,” says Tom O'Grady, chairman of NARI's Strategic Planning & Research Committee.

Among industry growth indicators NARI's membership found from the third quarter 2012 to the fourth quarter 2012, current business conditions were up 2.1 percent; customer inquiries up 3.9 percent; requests for bids up 3.7 percent; conversion of bids to jobs, up 3.5 percent and value of jobs completed up 4.3 percent.

In many cases, homeowners are remodeling instead of moving. That's especially true among homeowners with mortgages that are larger than the value of their home, even with a recovery underway.

These homeowners couldn't sell for a profit and rather than taking a loss, are hunkering

FIRST TIME BUYER: Buying A Fixer-Upper Home For Your First Home

For many people who have been sitting on the fence waiting and wondering if the housing market is rebounding, the signs are showing an improved chance to get into real estate while prices and loan rates are still low.

Why a fixer-upper? In some areas, the housing market is very low on inventory, especially new and/or homes in top shape. Foreclosures and short sales, though, can offer better prices if you can deal with the home's maintenance needs.However, many of the homes on the market need some work and some need a lot of care. How do you know what to look for in a fixer-upper? If you're a first-time home buyer, purchasing a fixer-upper can be a good option because the price will be lower. But fixer-upper homes come with flaws and some can be huge.

Many first-time home buyers don't take into consideration the extra expenses needed to maintain a home. They carefully calculate the mortgage, downpayment, homeowners' association dues, property taxes, and other hard costs but they neglect to factor in the everyday repairs and maintenance for the property. Things like a new water heater, stove, microwave, central heating/air conditioning systems, washer/dryer and dishwasher repairs and even plumbing and roof repairs. These items might be new or relatively new when you move in but, in the not-too-distant future, they'll need repairing or replacing. When they do, the added costs can put a strain on homeowners' monthly budget.

With this in mind, buying a fixer-upper for your first home can be a great way to get into the real estate market at a good price. However, it's essential that you completely understand the home's necessary repairs before you buy. Things to consider include how much you'll save by buying a fixer-upper versus what you'll need to spend to make it livable, how old the home is,

REMODELING: Bathroom Remodels Add Value

Homeowners looking to add value to their home should start in one of the most central rooms of the home -- the bathroom.

HouseLogic, supported by the National Association of Realtors (NAR), reports that the top bathroom trends can even be real money savers.According to C.P. Hart, one of the UK's leading contemporary bathroom retailers and suppliers of bespoke bathrooms since 1937, a great bathroom can add real value to your property.

First, take note of energy conservation. Low-flow toilets can use a fraction of the amount of water of standard versions. Low-flow shower heads and faucets can also conserve water, a prime consideration for homeowners all across the drought-ridden Midwest and beyond.

The next trend will tug at the heart of every tech geek. HouseLogic reports it's all about technological advances. "You'll be able to create a custom showering experience more affordably than ever. For $300 for simple controllers to $3,500 or more for a complete luxury installation, programmable let you digitally set your preferred water temperature, volume, and even massage settings before you step in. To achieve a personalized showering experience, you'll need a 120-volt power source, and a thermostatic valve and controller in addition to your standard shower head or heads. Luxury models may include a steam system, a wi-fi source for music, multiple body spray outlets, tankless water heater, and a secondary controller to start the system from another room."

Take it a step further with docking stations for your iPod and integrated television screens in your mirrors!

C.P. Hart say it goes beyond saving energy and geeking out, however. Bathrooms can have focal points and finishes that can be real show stoppers. "Fittings and accessories should never be ignored when furnishing your washroom. A key piece, such as a basin, can really enliven the look and bring a touch of luxury to any space. Glass Design create bespoke washbowls that are a great example of cutting-edge design meets decadence. Each piece is uniquely designed, using materials that capture the soul of the product, adding a new lease of life to your abode."

Today's bathroom designs are about clean lines and organized beauty. Less is more, letting

EMPTY NESTERS: Empty nesters carve out ‘boomer caves’

Those looking to get away without leaving home are creating rooms to watch movies, sip wine, or otherwise relax.

Preparing to renovate their new Back Bay condo, Bill and Lisa Vanderweil were sure about one thing: They wanted one cozy “getaway” room where they could relax, watch TV, read, or just talk.

So they converted one of the three bedrooms into a cross between a small entertainment room and an old-fashioned den, complete with wood paneling, big-screen TV, wet bar with a small sink and refrigerator, large chenille couch, club chairs, and other items to give the room a relaxed feel.

“This is the spot where I just want to hang out,” said Bill Vanderweil, 67, managing principal at Vanderweil Engineers LLP. “The room is so much fun,” added his wife, Lisa Vanderweil, 52. “We love going in there and watching Pats games and movies.”

Empty nesters such as the Vanderweils are carving out special spaces within, or outside, their homes — favorite spots to call their own or intimate spaces they can share with family and friends.

Call them “boomer caves,” such “getaway” spaces come in all sizes, shapes, and varieties — movie rooms, wine-tasting alcoves, intimate patios for alfresco dining, gardening sheds, basement exercise rooms with saunas, studies for work and pleasure, free-flowing kitchen-into-living-room spaces.

“We’re doing a lot of our work for empty nesters and others over 50,” said Greg Childs, business development manager for Concord’s Gallagher Home Builders Inc., which handled the Vanderweils’ recent condo renovation. “People are less formal than they used to be. They want more intimate and yet communal spaces, for themselves and family.”
Whether it’s the perfect reading nook or a casual place to enjoy a glass of wine and good conversation, here are some of the more popular indoor and outdoor caves that people are creating for themselves.

Yoon S. Byun/Globe Staff

The room features wood paneling and club chairs to make it a “spot where I just want to hang out,” Bill Vanderweil said.

Indoor caves

Movie/entertainment rooms. They’re classic — and come in many different sizes and styles and prices. Paul Apkarian, owner of Paul Apkarian Architects Inc. in Westborough, said movie rooms ­— also known as “home theaters” or just plan “entertainment rooms” — remain the most popular dream of people trying to create that ultimate comfy, escape room. Depending on how extravagant people want to get with the electronics and furniture, the

REMODELING: Remodeling Activity Bounces Back to 2005 Levels

More home owners are tackling remodeling jobs once again, as the Remodeling Market Index heats up and climbs to its highest point since the third quarter of 2005, the National Association of Home Builders reports. The greater momentum in remodeling is yet another positive trend recently trickling through the housing sector, NAHB reports.

"The strength of the [Remodeling Market Index], especially in owner-occupied properties, shows that home owners are investing in remodels as home prices stabilize," says George "Geep" Moore Jr., NAHB Remodelers chairman. "As owners become more confident that investments in housing will hold their value, they are beginning to undertake projects to improve their comfort that they had been putting off."

The index showed an increase in all three of the indicators measured: maintenance and repairs, minor additions and alterations, and major additions and alterations.

"The improvement in the RMI provides more evidence that the remodeling industry is making the orderly recovery from its low point in 2009 as we've been expecting," says NAHB Chief Economist David Crowe. "Although remodeling projects over $25,000 are now showing some

GREEN LIVING PART 2: How-to easy green kitchen makeover - Green Done Right Video

GREEN LIVING: An eco-friendly kitchen facelift - Green Done Right Video

HOME IMPROVEMENT: Home remodeling projects that pay you back

Are you eager to renovate parts of your home but aren't sure which projects will actually add value to it? Before you start ripping out walls or buying expensive faucets, learn which remodeling projects can actually pay you back when you decide to sell.

Homeowners across the country are trying to increase the value of their homes through remodeling projects.

In fact, 30 percent of homeowners say their main reason for a home remodel was to increase the value of their home, according to an October 2011 national survey of homeowners and renters, commissioned by Hanley Wood LLC, a media and information company in the housing and construction arena.

But just what is a home renovation worth?

"Everything you do to improve your home can add some value," says Steve Melman, director of economic services for the National Association of Home Builders in Washington, D.C. But Melman adds an important caveat: "Paybacks for remodeling have been falling, just like the price of homes," so it's important to know which projects will give you the most bang for your buck.

Fortunately, there are certain remodeling projects that could pay off big down the road. Keep reading to learn more...

Remodeling Investment #1 - Replace Siding

One of the top remodeling projects for adding value to your home isn't anything too complicated or arduous. It's as simple as replacing the siding on the outside of your home.

Just like we dress for success on job interviews, your home needs to make a good first impression on potential buyers when they see it from the street. In the real estate world, this is called curb appeal.

In fact, if you replace your exterior siding with fiber-cement - a composite material made of sand, cement, and cellulose - your home could recoup 78 percent of the average nationwide cost of the project, $13,641, according to a 2011-2012 "Cost vs. Value Report" conducted by Remodeling magazine.

If you want to shell out a little less, try vinyl siding, which costs about $11,729 and has an average recoup percentage of 69.5. Foam-backed vinyl siding is also available for a similar recoup value, though it comes with a higher price tag of $14,274.

Seven of the top 10 projects in Remodeling's report are classified as siding, window, or door replacement. These projects cost less than $19,000 and boast an average cost-to-value ratio between 69 and 78 percent. Clearly, making a home's exterior look good can entice more potential buyers to see what else it has to offer.

Remodeling Investment #2 - Replace Old Windows

Want to make a great remodeling investment in your home and feel good about it?

Updating your windows could be the answer. Whether you select vinyl or wood windows to replace drafty old ones, you can recoup up to 69.1 percent of the project's cost on your home's resale value, according to Remodeling's "Cost vs. Value Report." Window replacement costs average from a low $11,000 to $19,000.

New windows do so much for the look of a home inside and out, and as Melman points out, they make cleaning a breeze (pun intended).

"I have a 90-year-old home with old windows," says Melman. "When you try to clean them, the ropes that lift them up usually break. It's a pain, and they aren't insulated like the new windows." If this scenario sounds all too familiar, you're not alone.

According to the Hanley Wood survey, "More than half of the nation's 76 million owner-occupied homes were built prior to 1970." That means there are a lot of old windows out there that need some serious TLC.

Remodeling Investment #3 - Install a New Roof

Frosting on a cake - it's what buyers see when they drive up to a home with a brand-spanking-new roof.

If missing roof tiles are making your home look like it's seen better days, it might be time to invest in something new and attractive that could pay back more than half of the construction costs.

An upscale new roof using standing-seam metal can be quite costly, demanding a $37,481

SELLING YOUR HOME: Porch Perfection: Welcomes Buyers Instantly

When the weather turns warmer, front porches across the country are put to use again. However, not all porches or front entryways are put to "good" use. Sometimes over the cold winter months they've taken a beating and are badly in need of repair. Other times they're used as storage for overflow from the garage, basement, or house and that is not a welcoming sight for buyers.

So, it simply makes sense that after a long winter or a period of non-use, front porches might need some maintenance. This doesn't have to be the kind of work that takes weeks to do nor does it have to be extremely costly.In real estate, we talk about the importance of a few key elements to help sell your home: location, pricing, and curb appeal. These are some of the highest influential factors that buyers consider. The reasons are obvious. Location is vital to most buyers, pricing is critical (especially in today's marketplace), and curb appeal gets buyers off the street and inside to view your home.

Creating and maintaining porch perfection is about the little things that you do. In fact, some simple repairs, replacements, and re-arranging can brighten up and refresh a worn- out porch.

Start by looking at your porch with a critical eye. If you have been storing items on your porch that should have a home elsewhere, move them now. If you have old carpets, beat up or discolored mats, toss them out and replace them. Look at the lighting on your porch. Is it just one tiny bulb? Perhaps an inexpensive lighting system would brighten the porch, creating a more enticing and safer entryway.

Examine the hardware. Are the door handles corroded? Are they hard to turn to open the door? Think of it this way, if the door hardware looks worn and the doors are banged up, the impression is that this home is not well maintained on the outside and the inside. Some buyers won't go any further. If the home looks messy from the outside, all they will see is the front of your door. See your home the way you would if you were seeing it for the first time, just as the buyers are.

Add some appealing decor. There are a couple of rules that apply when it comes to staging an

HOME IMPROVEMENTS: Forget Cost Vs. Value, Homeowners Use Improvements To Pump Up Style, Not Equity

Sure, most home improvements will hold or boost equity, even in the worst market, but today's homeowners are more concerned that improvements enhance their home's form and function rather than its value.

Homeowners also say rather than cut into their home improvementbudget, they are more likely to slash expenses in other areas including vacations and other big-ticket purchases, in another example of an emerging trend that finds beleaguered homeowners hunkering down to hold onto their most valuable asset by making it more their own.A new survey of homeowners planning to build, remodel or decorate in the next two years, found the vast majority, 86 percent, saying it's more important to improve their home to "improve the look and feel of the space," compared to 47 percent who say it important the work increases their home's value.

The Houzz & Home Survey, which comes with a really cool infographic of the results, analyzes remodeling and decorating project histories and plans of Houzz users in the U.S. and Canada.

The survey also examined motivations behind the projects, homeowners’ plans for hiring remodeling and design professionals or doing it themselves, and how the economy plays a role in decorating and remodeling plans.

"We expected that in this economy Americans' highest priority would be increasing home value, but instead we found people are focused on pleasing themselves, not the next owner," said Liza Hausman, vice president of marketing for Houzz.

"Homes today are doing double or even triple duty as workplace, stay-cation, gym and more," Hausman added.

Many don't have an option, according to a recent National Association of the Remodeling Industry (NARI) survey of homeowners forced to stay in their homes years longer than they originally expected because the economy ruined their plans.

NARI found, instead of sulking about their house arrest, long timers have begun to turn their cells into cozy personalized nests - homes that better reflect individual lifestyles to make them

Smart Choices: Kitchen Flooring

Chef’s choice: Comfort and low maintenance Top-quality sheet vinyl flooring is ideal for busy cooks. It’s a snap to clean up, plus it’s completely waterproof and stain-proof. There are few seams to trap dirt or let moisture through to the subfloor, and installations for kitchens less than 12 feet wide (the width of standard sheet vinyl) are seamless.

Sheet vinyl requires no ongoing maintenance, so you can spend more time cooking. Sheet vinyl belongs to a group of flooring products called resilient flooring, which have flexibility and are slightly soft under foot. This characteristic eases muscle fatigue—a plus if you spend a lot of time in your kitchen. Also, resilient floorings are much more forgiving of accidentally dropped glasses and bowls.


Then there’s cushioned vinyl, which is backed with a layer of foam—regular sheet vinyl uses felt backing—providing an extra measure of comfort. But its added thickness and flexibility makes it difficult to create seams that stay tightly bonded over time. When your flooring dealer measures your kitchen, be sure to ask if your configuration requires seams. If the answer is yes, consider regular felt-backed vinyl.

You’ll find sheet vinyl flooring in many of colors and patterns. Thicker vinyl can feature a textured surface, and some types do an excellent job of mimicking the appearance of ceramic tile and real stone. Textured vinyl provides traction and is a good idea for kitchens where floor surfaces occasionally get wet.

ENERGY EFFICIENCY: Demand grows in N.E. for natural gas heat

NEEDHAM - The winter that nearly wasn’t is only just over but Ken Loderick is already planning for the return of cold weather: the Needham resident is about to replace his 20-year-old oil-based heating system with a new one fired by natural gas.

So are many of his neighbors. NStar is running a new gas line to his neighborhood after nearly two-thirds of the households told the utility they would consider converting.

  

Even with conversion costs, demand is up for cheaper alternative to heating oil

With prices for natural gas plummeting, and new burners and boilers significantly more efficient, Loderick expects to recoup the $10,000 or so cost to convert his system fairly quickly; in winters past Loderick kept his house cool, yet still paid a stiff heating bill.

“Most of the time the house is only about 64 degrees, except for a couple hours in the evening,’’ Loderick said. “That’s $4,000 a year to keep our area fairly cool.’’

Long the one region in the country where oil remains a popular fuel for heating, New England appears to be on a natural gas binge. At NStar, conversions have tripled over the past three years; National Grid said conversions are up 34 percent in the same period. 

Natural gas is enjoying a surge in popularity for several reasons. Production in North America has increased substantially over the past decade, and energy officials predict the nation has ample supplies for decades to come. That has resulted in prices falling to the lowest point in a decade. Gas prices have also been more stable, less subject to the wild swings that have roiled the international oil markets the past several years.

Though this past winter was mild, oil customers still paid much more to heat their homes - $2,238 on average - than did natural gas consumers, who shelled out $868 on average, according to the US Energy Information Administration.

The cost of converting can vary widely, from a few thousand dollars to update a younger system, to more than $10,000 for a complete kit of burner, boiler, hot water tank, and chimney liner. 

Utilities have incentives to ease the cost. GasNetworks, a collective of New England natural gas companies, offers rebates from $400 to $1,500 for high-efficiency boilers, furnaces, and other equipment. Zero-interest loans are also available. 

Another compelling reason: new gas burners are significantly more fuel-efficient than older heaters, so consumers save twice - once on the low price, and a second time on less consumption.

“I just tell people, in general, that this piece of natural gas equipment only wastes 5 percent of what you burn and that piece of equipment over there wastes 20 percent of what you burn,’’ said Joseph Wood, owner of Boston Standard Plumbing, Heating, and Cooling, a heating

HOME IMPROVEMENTS: HomeGain 2012 National Home Improvement Survey Results

HomeGain.com announced today that it has released the results of its nationwide home improvement and home staging survey. Past findings from the survey have been a guide for thousands of home sellers in preparing their homes for sale.

HomeGain recently surveyed nearly 500 real estate agents nationwide to determine the top 10 low cost*, do-it-yourself home improvements for people getting their home ready to sell.

The top five nationwide home improvements that real estate professionals recommend to home sellers, based on average cost and return on investment (ROI) to sellers, are:

Costs are averages and rounded up.

Cleaning and de-cluttering continues to rank as the top suggested home improvement (since the survey was originally conducted in 2003). This low cost home improvement is recommended by 99% of real estate professionals. The average recommended cost for this project is $402 with a returning value of just over $2,000 to the home’s sale price, or a 403% return (ROI).

In past surveys, Home Staging and Lightening and Brightening were battling it out for the number two spot on the top 10 list. In the 2011 survey,  Lightening and Brightening reclaimed the number two position and held on to it in 2012. Home Staging, however, fell to the number five position.

The options to landscape the yard and repair electrical and/or plumbing stay in the top five, both jumping past Home Staging.

“In a buyer’s market, sellers need to dress their homes for success before putting them on the market,” said Louis Cammarosano, General Manager at HomeGain. “The HomeGain results show that do-it-yourself home improvements like cleaning and de-cluttering and lightening and brightening your home are cost effective ways of increasing your chances of selling faster and closing closer to the asking price than homes rushed to the market with no improvements.”

 Rounding out the top 10 DIY home improvements are:

The home improvements with the highest price increases to a home’s resale value continues to be Updating the Kitchen and Bathroom ($3,255 price increase), followed by Repairing Electrical & Plumbing ($3,175 price increase) and Painting the Exterior of the Home ($2,176 price increase).

Surveyed REALTOR® commentary:

“Clients just need to clean and de-clutter.”

“We’ve had a few high-end homes staged and it didn’t do any good. Most likely because they were overpriced to begin with!”

“Resort area in Colorado. Most homes are well kept but even the nicest homes need focused attention when it comes to preparing to sell.”

“What I recommend a seller do will depend on their home. Power washing is commonly needed, and sometimes repairing cracked concrete walkways/patios/stoops. These items I wouldn’t consider to be improvements, but maintenance

REMODELING: Economy Sparks Remodeling: How To Ensure A Successful Project

Springtime generates a lot of home improvement activity. Many buyers are out shopping for their new home. With the purchase of their home, the desire to remodel often comes next. For others, the drastically fluctuating housing prices are causing homeowners to stay put and that’s causing them to want to remodel their existing footprint.

Some of the most popular remodeling projects have to do with creating homes that are livable for all ages. The National Association of Home Builders says, in 2010, that 62 percent of surveyed builders were working on “aging in place” modifications.Whether it’s a room addition or the renovation of a kitchen to upgrade amenities and make the space feel more comfortable to suit your needs, precautionary steps to get the most out of your remodeling project will create the best outcome.

That means granny flats or in-law apartments (extra rooms with kitchenettes) are becoming staples in homes. As baby boomers ease into their golden years this type of remodeling project will continue to grow. Entry-level bedrooms are also popular additions due to the ease of access for the elderly.

Some remodeling companies are now requiring their staff to become Certified Aging in Place specialists so they can offer expertise in designing and modifying buildings and homes for the elderly. Another hot trend is using outdoor living space to expand the home’s square footage. What’s hot in outside remodels? It may be expensive but natural stone is all the rage. Gourmet grilling kitchens, fireplaces, flat screen TVs with surround sound and big comfy couches turn the backyard into a cozy space to relax and entertain.

But regardless of which type of remodel you’re planning to do, finding the right contractor for the job is vital and that can be a difficult task.

The National Homebuilders Association offers some tips for homeowners to help them navigate the process. Here are some important precautionary measures to take before your hire a remodeler.

Check with NAHB.org to find a remodeler who is a member of the National Association of Homebuilders. You can also check with the Better Business Bureau at BBB.org to look up the company’s rating. Of course, family and friends can also offer referrals but checking with professional associations can help provide background information that a friend might not be able to.

Another great way to find a remodeler is to scope out the companies who are working in the

MARKET TRENDS: Builders' Costs Rise While Homes and Condos Shrink

Most Canadian builders are targeting the move-up custom home market this year, but houses and condos are getting smaller.

Builders say the average size of a new single-detached house built in Canada this year will be about 1,900 square feet, and they think house sizes will shrink even further. That's down from the 2,000 square feet predicted in last year's annual Pulse survey of members by the Canadian Home Builders' Association.

British Columbia has the largest average house size at 2,200 square feet, while homes in Quebec, Saskatchewan and Manitoba average 1,500 square feet.

In the Greater Toronto Area, where there are more condominiums under construction than anywhere else in North America, the average new condo last year was 820 square feet, a reduction of 52 square feet from 2010, and 100 square feet smaller than six years ago. That represents an entire 10X10-foot room.

This year, builders across the country expect the average condo size to stay at around 800 square feet.

However, smaller houses don't mean lower prices. Two-thirds of builders predict that new home prices will rise this year.

The cost of serviced lots is the main concern of builders, with about one-third of those surveyed

NEIGHBORHOODS: Noisy Neighbors Be Gone

From noisy neighbors and adolescent garage bands to urban living spaces it can be hard to find some peace and quiet.

Enter QuietFiber® noise absorbing material. This versatile material is a solid way to address sound issues and can be installed as an easy do-it-yourself project. According to the makers of this revolutionary product, “QuietFiber is the only sound dampening product on the market that can be custom tailored to create a complimentary design element in any space. You have the sound abatement properties you need, in a product that can be completely hidden under a tapestry or in strategic spots throughout the room, or disguised as an artistic element within the space."Aside from relying on city and HOA ordinance enforcement, a strong hand with teenagers, or complaining to the noisy party, it can be tough to find a solution to a noisy space.

When complaints from neighbors began to trickle in for club owner Bobbie Rahmani in Los Angeles, California, he knew he had to find a way to deaden the noise and relieve his stressed out neighbors. He also wanted a solution that looked as good as it worked.

"We haven’t had any complaints since we hung the panels, and no news is always good news," Rahmani said of the noise deadening qualities of the Quiet Fiber treatments.

This versatile material is a solid way to address sound issues and can be installed as an easy do-it-yourself project. High sound absorbency QuietFiber is a two-inch thick DIY interior noise solution that can be cut to fit and simply hot glued underneath a bar, cabinets, countertops, tables, chairs, behind a wall tapestry or curtains. Slide a QuietFiber "pillow" on top

CAPITAL IMPROVEMENTS: Did You Sell Your Home After Making Improvements?

Keeping track of the cost of capital improvements to your home can really pay off on your tax return when it comes time to sell.
It’s no secret that finishing your basement will increase your home’s value. What you may not know is the money you spend on this type of so-called capital improvement could also help lower your tax bill when you sell your house. 


Tax rules let you add capital improvement expenses to the cost basis of your home. Why is that a big deal? Because a higher cost basis lowers the total profit—capital gain, in IRS-speak—you’re required to pay taxes on. The tax break doesn’t come into play for everyone. 

Most home owners are exempted from paying taxes on the first $250,000 of profit for single filers ($500,000 for joint filers). If you move frequently, maybe it’s not worth the effort to track capital improvement expenses. But if you plan to live in your house a long time or make lots of upgrades, saving receipts is a smart move. What counts as a capital improvement? While you may consider all the work you do to your home an improvement, the IRS looks at things differently. 


A rule of thumb: A capital improvement increases your home’s value, while a non-eligible repair just returns something to its original condition. According to the IRS, capital improvements have to last for more than one year and add value to your home, prolong its life, or adapt it to new uses. Capital improvements can include everything from a new bathroom or deck to a new water heater or furnace. Page 9 of IRS Publication 523 has a list of eligible improvements. There are limitations. The improvements must still be evident when you sell. So if you put in wall-to-wall carpeting 10 years ago and then replaced it with hardwood floors five years ago, you can’t count the carpeting as a capital improvement. 


Repairs, like painting your house or fixing sagging gutters, don’t count. The IRS describes repairs as things that are done to maintain a home’s good condition without adding value or prolonging its life. There can be a fine line between a capital improvement and a repair, says Erik Lammert, tax research specialist at the National Association of Tax Professionals. For instance, if you replace a few shingles on your roof, it’s a repair. If you replace the entire roof, it’s a capital improvement. Same goes for windows. If you replace a broken window pane, repair. Put in a new window, capital improvement. One exception: If your home is damaged in a fire or natural disaster, everything you do to restore your home to its pre-loss condition counts as a capital improvement.


How capital improvements affect your gain To figure out how improvements affect your tax bill,

REMODELING: How to get a better bid

(MONEY Magazine) -- Budgeting for a large remodeling project presents a bit of a chicken-and-egg problem: You won't have a feel for the cost until you get bids from contractors.

But unless you give pros a ballpark figure from the start, they'll have to guess at what to include in their bids -- and they'll come back to you with a huge range of prices for very different plans."A faucet can cost $200 to $900, a window can be $400 to $1,200," says Madison contractor Mike Gasch. "I need to know where to aim."

To solve this conundrum, do some calculations first.

1. Start with average costs |

When insurance companies need to pinpoint construction costs, they multiply the length by the width of the space and then multiply that by the project's typical cost per square foot.

Albert Paxton, an estimator who provides such data to claims adjusters and contractors, pegs average per-square-foot costs of remodeling jobs at this:

• Kitchen: $174
• Powder room: $133
• Master bathroom: $160
• Family room: $92

2. Tweak to fit the scope

These numbers are for gut remodels, meaning the room is demolished right down to the framing and rebuilt.

9 remodeling tips to make your home feel bigger

With a less involved project -- in the kitchen, say, you might be refacing the cabinets and replacing the countertops and appliances instead of tearing out everything -- cut your number by about 30%, says Paxton.

For a cosmetic update, as in fresh paint on the cabinets plus new lighting and hardware, reduce it by about 60%.

3. Adjust for your location

A plumber working in Manhattan might charge twice the hourly rate of one in Statesboro, Ga.

Same goes for everyone from laborers to architects. In a metro area along the Northeast or Pacific seaboards, add 30% to 40% (use your judgment about your market). In a rural area, especially in the South or Midwest, drop it by 15% to 20%.

4. Modify for style

These figures assume you're buying mid-range fixtures and finishes. If you're going upscale, as in

REDESIGN: 4 things to consider before converting basement

Finished basement image via Shutterstock.

If you're fortunate enough to have a basement in your home, you may have the potential for a substantial amount of additional living space right below your feet. But if you're thinking of converting that cold and unappealing area to a warm and cozy new space, there are several things you'll want to take into consideration first.

Is it safe?

One of the very first things you want to look at with any basement conversion is safety, and that can take a lot of different forms.

Is there convenient and safe access from inside the house in the form of a stairway that meets current building codes, or is there an exterior entrance that works for what you want to use the space for? Is there a sufficient amount of headroom? Would structural supports for the upper floors be in the way, and if so, can they be moved or altered to allow for the necessary space? If you'll be creating a sleeping room, is there safe and legal egress?

Is it dry?

Now we get down to what's a big issue in a lot of basements, and that's moisture. Newer homes are often designed with the proper drainage systems and exterior waterproofing to keep the basement areas dry and ready for building, but many older homes had basements -- "cellars" -- that were designed for cool storage and were never really intended to be occupied.

If you have a basement with ongoing or seasonal moisture issues, you need to consult with an experienced excavation contractor before you get started on a conversion project. See what it would take to have a drain installed and have the exterior walls properly waterproofed, and perhaps have the exterior grade adjusted to change the flow of water runoff around the exterior of the home.

In some cases, you may need to change gutters and downspouts to channel roof water to a different location, or possibly install a sump pump to handle seasonal water issues.

No matter what, be sure that your basement moisture issues are handled before you start closing things up.

What will the space be used for?

Once you've determined that you have a space that's safe and dry, decide what you want to use the converted basement area for. That will make a big difference in your design, and also in your construction costs.

For example, it may be a big game room, in which case you need little more than wall, floor and