Smart Investment — Home Improvement

Tom Adkins

So, that sweet tax refund finally reached your hands. Time for that big-screen TV? Or that island vacation? Maybe a new boat? Let’s go shopping, honey!!!

Wait! Before you blow that dough on a new wardrobe, consider spending it on your home. A $3,000 deck can return $6-7,000 on value. Painting is the cheapest way to spruce up a home. Then again, a new kitchen or bath can really jack up value. A finished basement may double your investment. And of course, you get to watch Fox News in your new home theater.

Sure, these improvements don’t put money in your pocket. But they can add significant value. If you need to borrow money, your house will appraise for more. That means home equity lenders will offer more cash, lower rates, or both. So if you’re sending Junior off to college, buying a car, funding a wedding, or buying that boat, use an equity line instead of a credit card. And it’s usually deductible.

Above all, consider this: If you lived all year sending extra money to the US Treasury, why not buy a larger home? It will usually appreciate far more. And remember, leveraged home appreciation usually blows away stock market returns. Plus, well-spent improvement money can give a fat payback when you sell that tired house.

Of course, the premier lesson of a tax refund is to stop giving that zero-interest loan to Uncle Sam. Change your withholding so you have that money in your pocket. And maybe if you add that cash to your budget, you can afford that bigger house you’ve been dreaming about.

This weekend our Business Block has much more on the dilemma of buying a home. Tune in Saturday 10am — noon ET.

Tom Adkins is the publisher of and appears regularly on FNC's business program Cashin' In.