Investing in homeownership is one of the best things you can do with your tax refund. You’ll not only gain an appreciable asset, but you’ll also earn future tax breaks available to first-time homebuyers.
Existing homeowners can also get in on the act. Investing a tax refund in the right home improvements and repairs can increase the value of your home while earning tax deductions for next year.
Tips for Aspiring Homeowners
If you’re gearing up to buy your first home, you can maximize your refund by doing the following:
- Save up for a deposit on your new home. If you can put a large enough down payment on your mortgage loan, you won’t have to buy private mortgage insurance (PMI) when you purchase a home. What’s more, a large deposit can lower interest rates on your loan.
- Save up for closing costs. A lot of aspiring homeowners don’t realize that there are some costs involved in closing on a home. These costs can change, so contact your loan officer for more details. You can always ask the seller of your new home to cover a certain amount of these for you.
- Pay off other outstanding loans. Keeping up with your payments isn’t good enough if you want to qualify for a good mortgage loan. Lenders want to know how much you owe in other loans.
Tips for Homeowners
Some home improvements have a higher return on investment than others. These include:
- Make eco-friendly, energy-efficient improvements. You’ll save money on utility costs and earn a tax credit at the same time.
- Improve the exterior of your home. Options include replacing older siding and even adding stone siding and a deck. These repairs and improvements offer a high return on investment if you opt to sell the home later.
- Replace the entry door. Metal doors offer the highest return on investment, but fiberglass is also a great option.
- Save up money for home repairs. Pest infestations, mold growth, and other problems are best dealt with as early as possible. Having cash on hand for emergency repairs can help you save money long-term.
- Invest in an HVAC maintenance plan. Having your unit checked twice a year ensures it’s in good working order when it’s needed most. It also lengthens the lifespan of your HVAC unit, so you don’t have to invest in replacing it prematurely.
These are just some of the many ways you can maximize your refund by investing in your current or future home. However, the potential is unlimited if you know how income tax laws work and how to use them to your advantage. MIG’s online income tax quiz can help you get acquainted with basic tax laws that will help you earn the maximum refund possible. Tax laws and regulations may be dry and boring, but they can work wonders in helping you make your dreams of homeownership and home improvement come true.
