Tip of the Week: The Best Remodeling (8/23/99)

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	The Best Remodeling Financial Tip of the Week by Deloitte & Touche OnLine August 23, 1999

Some projects pay off better than others, and even the good ones are tricky.

See our archive of previous tips on your money, your taxes and your financial plan.

When it comes to remodeling, all projects are not created equal.

On average homeowners can recoup 94 percent of their investment from a minor kitchen remodel and 89 percent of the cost of adding a bath, according to a joint study completed last year by Realtor and Remodeling magazines. Conversely, a homeowner is unlikely to recoup more than 70 percent of his or her investment from adding a deck, replacing windows or adding a home office.

But homeowners don’t have to break the bank for remodeling to produce rewards. The study found a "minor" kitchen update including new vinyl or ceramic tiling, under cabinet lighting and other small changes cost an average of $9,182 and earned owners a 94 percent return on their investment at resale time. Major kitchen renovations, which included adding new appliances and shelving or adding a sink ran an average of $24,486 nationally but earned a return of only 84 percent at resale time.

Homeowners with a hankering to shoot the moon on more ambitious projects might consider add-ons such as family rooms, additional bedrooms and even second floors. On average homeowners who sold their homes within a year of those renovations recouped more than 80 percent of their investments.

Finally, because home improvements are only partially self funding when considered in light of boosted resale values, homeowners should only undertake them if the projects will increase their own comfort and convenience. Owners who do decide to move forward with a project should be sure to keep complete records of their expenditures for tax purposes.