Home improvement is the maintenance, repair, or enhancement of residential real property. This includes projects that improve the interior and exterior of a house or apartment, as well as projects that add space to the home, such as an addition. Home improvements also include making changes to the home’s infrastructure, such as installing a new roof or repaving a driveway.
The home improvement industry has seen a boom in recent years, particularly during the COVID-19 pandemic. The industry comprises of businesses that offer building materials, appliances, decor, and services performed by contractors and tradespeople. It also includes aggregators that bundle home improvement service offers and act as intermediary agencies between providers and customers.
There are a number of factors contributing to the increase in home improvement activity. One factor is rock-bottom interest rates, which make borrowing to finance a home improvement project more affordable. Another factor is the desire to invest in a more comfortable and functional living environment. The popularity of DIY home improvement projects has also contributed to the growth of this sector.
However, a homeowner should be careful when selecting contractors for home improvement projects. It is important to find contractors that are licensed and insured. Homeowners should also perform due diligence by checking the contractor’s references and background. In addition, a homeowner should always get a written contract before any work is done or money is paid.
It is also important to choose home improvements that will increase the value of a home. This is not an easy task and will depend on a variety of factors, such as the timing of the renovation, the quality of the work, and market conditions. In general, structural improvements will have a greater impact on a home’s value than cosmetic changes.
A major mistake homeowners often make is improving their homes well above the average for their neighborhood. While this may attract buyers, it will not necessarily lead to a higher sales price. For example, adding a swimming pool to a home in an area with no other pools will not likely be a good investment.
Home improvements can significantly increase the resale value of a home, but there are some projects that will not provide much return on investment. These projects may be too personal or may not fit in with the style of the home’s neighborhood. For example, a homeowner may consider adding a unique light fixture, but it is important to remember that most potential buyers will not share the same taste in lighting fixtures.
It is also important to understand how a home improvement project will affect property taxes. Generally, labor costs for home improvements are tax-exempt in most states. However, it is essential to check with a CPA or a tax professional because each state’s regulations are different. In New York, for instance, homeowners must pay sales tax on the construction of a capital improvement, but they are not required to pay tax on material costs.