4 Great Projects for Your Tax Refund
Somewhere between New Year's Day and Valentine's Day, we start thinking about tax refunds and all the things that we can do with the additional influx of income. A family trip to Disney? Pay off holiday debt? Maybe a new front door? The myriad options run through one's head like a sleeping giant counting sheep. But, for those considering a home remodel project, this article provides the best small, yet impactful, project options. Oh, and by the way, they all have top-of-the-line ROIs.
And, if you love coffee like me, you'll appreciate the references.
$500 - "Tall" Refund
Project: Replace Entry Door - ROI: 101%
That's right, spend $500 and you will get $505 back in equity. In other words, you earned $5 in profit by replacing your entry door. Just make sure to select a door that is aesthetically appealing and a door color that complements your home's exterior color scheme. Remember, in order to achieve equity, you will need someone to be interested in your home and purchase it.
The featured door in the image is a 2-panel, pre-hung, steel entry door from Home Depot for $249 pre-tax. If your budget is $500, you will have plenty of room financially to afford the rest of the project. You will need to paint the door, both interior and exterior, which is cost about $50 in material, bringing the total to $325. That leaves you $175 to hire a handyman to install the door.
The project would take about 1 hour for a handyman to properly install the door, assuming there is no additional prep work needed. A handyman would charge between $100 - $200 to install the door, which would bring the total right to $500.
If you use your $500 tax refund to replace your entry door that returns 101% of your investment, you will definitely have the blessing of your financial advisor. As a matter of fact, once you tell him how great the project worked out for you, he'll probably replace his door, too. #smallyetpowerfulproject
$1,500 - "Grande" Refund
Project: Replace Garage Door - ROI: 88%
Imagine its March and its still pretty cold outside. You pull into your driveway, see your brand new garage door, press the opener and drive into your warm garage. And ever since you replaced your garage door, neighbors have been driving by, saying how great it looks. "How good it feels..." is what you think as you turnaround to glance at your beautiful new garage door. And, it cost you next to nothing - just one tax refund.
For this project, you need to purchase a garage door, a garage door opener, and hire a company to install them. The good news is that Home Depot can do all of this for you.
The garage door in the picture is an insulated, single entry, painted steel, wood-look garage door with insulated, double pane windows. The door also includes a 1/2 hp, chain-operated, Chamberlain garage door opener with one wireless keypad and one wireless key remote. For all material and install, the pre-tax total is $1,524.52. The after tax price is around $1,675.00.
With an 88% ROI, you will receive $1,474 in equity. In other words, even if you pay $175 out-of-pocket, you will still get all of your money back after your tax refund covers the majority of the costs. This is a great project that you will get to enjoy looking at everyday.
$3,000 - "Venti" Refund
Project: Replacing Windows - ROI 77%
Even with a venti-sized refund, replacing all of your windows without additional funds is not possible. However, the good news is that you can purchase all of the material needed for the project with your tax refund. The material includes:
custom-sized, double hung, insulated, white vinyl windows (approximately $300 each)-
window seal tape ($100)
insulating foam ($50)
felt paper ($30)
interior and exterior casing, as needed ($200)
With installation, you can expect for each window to cost between $150-$200. So, if you have 8 windows, then you can estimate that install would cost between $1,200-$1,600.
In all, if the material for your windows cost $3,000 and the labor cost $1,600, then the total project will cost $4,600. With a $3,000 tax refund, you will only have $1,600 to pay. With 77% ROI, you will receive $3,542 in equity (definition: the dollar amount considered to be able to add to the sale price of your home). So, the $1,600 you pay upfront will be recouped if you sell your home. Plus, assuming you install energy efficient windows, you will save $100+ each year on heating and cooling expenses.
$6,000 - "Quadruple Shot Latte" Refund
Project: New Trex Deck - ROI 70%
Now, if you receive a large tax refund like $6,000, then you will need to change your thinking in regards how the influx of income will be used. For instance, with the 3 previous projects, the idea was to use the tax refund to fund most, if not all, of the project. With a large refund, think large project such as $10,000+ to complete.
Normally, large projects require saving and financing. A large tax refund helps curb the need for lots of financing. For instance, a 300 sq. ft. Trex deck with a new substructure, deck boards, railing, and stairs will cost $15,000. If you save $5,000 and use the $6,000 tax refund, then you only need $4,000 in financing. Plus, a Trex deck is a long-term investment; it won't need replacing for at least 25 years, which is typically longer than a homeowner normally stays in one residence.
In conclusion, use a large tax refund to fund a large project that will be a long-term investment. These type of projects include: a new Trex deck, replacing kitchen cabinets, installing new hardwood floors throughout the first level, and installing new siding.