Repairs and Improvements - Let's split hairs over which is which .....
You know the 'gray' areas .... you say potato, I say potatoé .....
My observations from an e-newsletter that was recently sent to me about home repairs and improvements. Many people just don't understand the difference and really ... is there a difference? I just don't mean for IRS qualifications, I mean is there a difference in real life?
Ok, clear as mud. So is a roof a repair or an improvement?
So let's dissect this bit of home ownership that makes everyone so confused. A repair is something that preserves the home's original value but does not enhance it's value. I agree with that statement thoroughly. If you need a new roof, you must replace that roof in order to keep your investment in good condition. All homes need and have roofs. So will you get a return on your investment if you select up and get a better grade of roof? Will it actually make your home sell for more money at this time in the market?
Personally I say NO. All homes need roofs. If a seller chooses to spend another $5000 on designer roofing shingles it will make the curb appeal of the home better but I will argue the fact that you will find a buyer willing to give you an extra $5000 for it. It will add visual value and give the home a better overall appeal but it will withstand the snow, rain and cold just like the regular roof without the $5000 price tag.
An example of a worthwhile improvement - A home where 1.5 baths are the neighborhood standard and you put in another full bath. Cha-ching. Good improvement and probably worth every penny you will pay. This will definitely make the home more functional and update closer to today's preferred living standards. If you decide to line the walls in marble and go totally ape with upgrades over and above the neighborhood norm, will you get your money back? Personally I say NO.
There is a gray area for what a future buyer will be willing to pay for 'improvement insanity'. They will pay for the improvements but the gray area becomes even foggier about what amount, if any, can be recovered.
The best advice would be to do basic improvements and repairs within your neighborhood norms and stay budget conscious throughout the entire process.