Does Renovating a Kitchen Help With the Resale Value?

Individual tastes vary in remodeling a kitchen.

With the pressure of a competitive housing market, homeowners may consider remodel projects to try to increase the resale value of a home. Such projects as remodeling a room or siding the house require a thorough cost vs. value analysis to verify they are worth the time and expense. This is especially true in remodeling your kitchen. Evaluating whether renovating your kitchen will help with your resale value involves looking at several variables.

Expense

According to "Remodeling Magazine's" annual "Cost Versus Value Report," the average cost of a major kitchen remodel was $58,367. For the trouble, the average increase in home value for these homes was $40,126, recovering only a little over two-thirds of the investment. In the case of a minor remodel, the average cost was $21,695 while the average cost recovery was $15,790, or nearly 73 percent. The recovery percentage in both categories represented a decline from the previous year's results. These values vary widely by geographic region, so scrutinize them with further research to determine how they may affect your case.

Individual Tastes

One of the challenging problems with renovating a kitchen is matching it to a potential buyer's taste. Merely spending money on trendy fads and flashy decorations does not guarantee the desired increase in resale value. For example, while painting a kitchen in black and white may appeal to some buyers, it may repulse an equal number of potential prospects. Choosing an extremely trendy design that may become a less desirable look in a short amount of time that requires money to remodel again may actually harm resale value.

Remodeling Components

There are some portions of remodeling that may make a bigger difference than others. For instance, while the current emphasis on green technology for appliances that use minimal electricity and water may eventually begin to wane, saving money on utilities likely will not. Durable counter tops such as granite, solid wood cabinets and hard wood or ceramic tile flooring will likely improve the resale value of your home when replacing your less durable substances.

Other Considerations

Adding counter top, cabinet and storage space in a kitchen will likely help with resale value. Space efficiency gadgets such as turntables and pull-out shelving, while sometimes being quite expensive, enhance the use and the perceived value of the kitchen. Performing smart, reversible updates yourself with less expense may improve your cost versus value in a project as long as you have experience in the repair. Remember that any home improvement beyond standard maintenance is deductible against your capital gains tax if you itemize deductions and you do indeed have a gain when you sell. Calculate this tax savings into your evaluation of whether to remodel or not.

References

• Remodeling Magazine: National Data
• Tami Bobb: Remodeling's Payoff
• Real-Estate-Agents.com: Remodeling, Repairs and Resale Value
• HGTV: 9 Hot Trends for Today's Kitchens
• FixR: Kitchen Remodeling Trends
• Front Door: Top 10 Home Updates
• U.S. Internal Revenue Service: IRS Form 530

Resources

• Home Addition Plus: Remodeling Projects that Add Value
• Handy American: Home Kitchen Remodeling; How to Select Your Kitchen Counter
• Home Renovation Guide: Which Renovations Add the Most Value?; January 2009
• Build Your Own House: Increasing Home Value - Kitchen Remodeling
• My Home Ideas: 10 Kitchen Remodeling Trends
• Parade: How To Add Value To Your Home; Lynn Brenner