Home improvement is the term used to describe any upgrade or renovation to a house. This can include remodeling or adding on to a house, painting the interior or exterior of a house, repairing or replacing siding or roofs, installing new cabinets or flooring, or installing a pool or deck. Some home improvements can be very expensive, while others are relatively inexpensive. Homeowners often complete home improvement projects in order to add value or improve livability to their homes.

Homeowners have been spending more time at home during the pandemic and as a result many of them have undertaken several home improvement projects. In fact, about 3 in 5 homeowners have worked on home improvements since March 1, according to the NerdWallet survey. However, while renovating a house to make it more functional is a good idea, homeowners should be careful not to go overboard and spend money that will not return when they are ready to sell their property.

The type of renovation you choose will also have an impact on its ability to increase your home’s value. For example, structural changes, such as building additions, will tend to add more value to your property than a new kitchen or bathroom. Similarly, technological upgrades (like a smart thermostat) will likely not add much value to your house, but energy-saving projects (like new windows and insulation) could.

Regardless of the type of project, it is important to work with reputable professionals who can give you an accurate estimate for the job. This will help ensure that the project does not cost more than you anticipate and helps to protect you in case something goes wrong during the process. It is also important to establish a payment schedule that includes an initial down payment and then incremental payments until the project is completed and all inspections and certificates of occupancy are issued. Additionally, you should always get written contracts for all work performed and be sure to read them carefully to understand the terms of warranties or guarantees.

A common mistake homeowners make when undertaking a home improvement project is to focus too heavily on aesthetic upgrades. This can backfire, as it is difficult to predict what potential buyers will find appealing. In addition, style trends change over time. For example, avocado-green appliances may be trendy now but could look dated ten years from now.

Finally, it is critical to consider whether the work you do will be tax-deductible. Generally, any capital improvement that increases the value of your home or prolongs its useful life can be added to your cost basis or subtracted from your sales price when you sell your property. However, certain repairs are not considered to be a part of your home’s cost basis or eligible for a tax deduction.

In addition to paying for their home improvement projects with cash from savings, the majority of homeowners surveyed by NerdWallet said they paid for them with sources like credit cards, personal loans, cash-out refinancing and contractor arranged financing.