Publication date: 02/24/2012

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Use tax refund to make energy-efficient upgrades

In 2011, the average federal tax refund check was around $3,000. This year, if you are anticipating either a refund from Washington, D.C., the State of Michigan or a bonus check from your job, you could have a substantial amount to spend on your home's improvement.

Upgrading your home with energy-efficient improvements is a great way to reap some long-term savings that will continue to pay you back for as long as you own your home. The key is to determine what home improvement expenditure will bring you the best payback in today's tough housing market.

If you are thinking about either selling your home this spring or summer or staying put, John Yugovich, a Realtor with Keller Williams in Farmington Hills, www.yugovichgroup.com, (248) 790-8424, has three suggestions on how you can spend your tax refund.

"Clean, carpet and paint," Yugovich said. "With all the foreclosures on the market, a homeowner's goal is to make sure their home looks better than a foreclosed home, and the best and least expensive way to do that is by cleaning it up, adding some new carpet and adding a fresh coat of paint."

While "clean, carpet and paint" makes sense even if you plan to stay in your home, there are other things homeowners can spend their tax refund on that will guarantee they get a return on their investment, especially if they plan to live in their home for five to 10 years or more. The best way to get a payback is to focus on upgrades that improve your energy efficiency.

For good ROI, or return-on-investment, for a homeowner, the first thing I suggest is upgrading the home's insulation. For example, if you have an older home with a thin layer of insulation in the attic, upgrading your insulation to an R-49 level can decrease your home's energy bill by as much as 25 percent.

While the average cost for attic insulation these days is around $1.25 to $1.50 per square foot, wall insulation for a standard 1,000-square-foot ranch home would cost around the same $1,500. Both are well within range for most homeowners who are getting the average tax refund. Not only will insulation lower your energy bill year-round, but it will also improve your comfort level. Make sure to also check on energy rebates from your utility providers that could also reduce your out-of-pocket expense.

You can start determining where you use the most energy and which home upgrades will provide you with the best energy savings with the Energy Analyzer offered through DTE Energy's website (www.dteenergy.com) for DTE customers and the information and energy savings calculators available from the Department of Energy's Energy Star website (www.energystar.gov).

Upgrading appliances is another area to consider. Refrigerators get a lot of use in homes, and often we have one in the kitchen while an old one is moved into the basement or garage. By replacing them with Energy Star qualified models, you can save around $200 per refrigerator or more per year just on the energy costs, based on energy savings calculations from the Energy Star Refrigerator Retirement Savings Calculator. Replacing your old clothes washer with an Energy Star qualified one can save up to 30 percent on energy and can reduce water consumption by more than 50 percent.

No matter the size of your refund, you can still spend the money on something less expensive to start saving. Try changing the light bulbs in your home to Energy Star compliant versions. This can easily save you $200-$300 per year depending on the size of your home, and the investment in the new bulbs would be covered by your first year's electricity savings.

These are just some of the upgrades you can do to improve your home while receiving an energy-efficiency payback. Look into getting a new 90-plus furnace or new energy-efficient windows that can also provide excellent return on your investment. And don't forget about the improved comfort level, functionality or improved aesthetics that come with upgrading the energy-related features of your home.

If you would like to suggest a question for this column, e-mailaskglenn@masterhandyman.com. If you want to talk to Glenn Haege personally, call his “Handyman Show” on WJR-AM (760) at (866) ASK GLENN, (866) 275-4536 between noon and 2 p.m. Saturday and Sunday. The “Handyman Show” can be heard on more than 130 radio stations nationwide. 

Note: This article was accurate at the date of publication. However, information contained in it may have changed. If you plan to use the information contained herein for any purpose, verification of its continued accuracy is your responsibility.

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