Tax season is here and if you plan to receive a return this year, do you have a plan in place for how you will use it? If you don’t have a plan, now is the time to make one. The average American will receive a $3,000 tax refund according to NerdWallet, and the last thing you want to do is make a poor decision and waste this nice boost in your bank account.
There are different ways to use your tax return whether you are planning to sell, ready to buy your first home, or are staying in your current home. Keep reading for our tips on the smartest way to use your tax return for each scenario!
Planning to Sell
If you are planning to sell your home and move to a new one this Spring, the best way to use your tax return is to make some updates to your home that will increase your sale value. Whether it’s new appliances, some landscaping additions, new paint throughout the home, or replacing your old stained carpet, there are plenty of smaller updates to make that will entice buyers to offer asking price or higher!
Buying Your First Home
This is a big step in anyone’s life that requires a lot of planning. Our website has an entire page dedicated to helping you understand the Buying Process from start to finish so you can accomplish your goals with confidence. View our Buyer’s Guide here. One thing nearly every home buyer needs is a down payment for anywhere from 3.5% to 20% of the home’s price. Saving your tax refund to boost your down payment is the smartest action for people in this group. Check out this article from SoFi for five other ways to save enough money to make your down payment.
Staying in Your Current Home
Your priorities are different from those above if you are not planning a sale or a move, but just want to make some updates in your current home. Your tax return gives you a great opportunity to check off some “want to update” and “need to fix” items from your list. A great place to focus on is improving the energy efficiency in your home. This might mean new appliances or adding new weather stripping, window shades, and lightbulbs throughout your home.
We hope these tips help you to use your tax refund in the smartest way to support your future goals as a homeowner!