How to allocate your tax refund to protect your home

Key tips to remember

  • Tax refunds are a great way to boost emergency funds and tackle home repairs
  • Budgeting experts recommend spending 1-4% of your home's value each year on repairs
  • A home protection plan can help control repair costs while you build your savings
Maintenance and Repairs, Home Warranty

Unless you're an accountant, chances are that tax season isn't your favorite time of year. There are receipts to sort through, forms to labor over and more deadlines than you can likely remember. However, the silver lining is that after all that work, you probably have a tax refund coming your way.

According to the IRS, Americans received more than $320 billion in tax refunds through December of the 2017 tax season. The average refund amounted to $2,895, higher than the previous year.

And while there are countless ways you can spend that money, savvy homeowners choose to spend it protecting their investments by budgeting for home maintenance and repairs. This guide can help you put your tax refund money toward protecting your home.

Do some small repairs now to prevent big issues later
Chances are there are a few things you've been putting off. Use your refund to cross them off your list, and you could save money in the long run. For example, if you haven't recaulked your doors and windows in a few years, addressing this early in the season could reduce your heating bills. Another option is to have a professional plumber inspect your system for problems and flush your water heater. 

Build your emergency savings
There are a number of calamities that could put you in a tight spot financially, which is why experts recommend you have at least three months' worth of fixed expenses (housing, utilities and food) stashed away just in case.

Unfortunately, a survey from Bankrate found that 24 percent of Americans had no emergency savings as of June 2017. And moreover, that 1 in every 5 adults had some savings, but not enough to pay the bills for a three-month-minimum in the event of a serious accident, job loss or unforeseen expense. 

Start a home repair fund
If your emergency savings are healthy, the boost of a tax refund can be a great way to put money toward annual home maintenance. Budgeting experts recommend that you plan to spend between 1 to 4 percent of your home's value on maintenance and repairs each year. For a $500,000 home, that's more than $15,000 -- a hefty sum. So get started!

Invest in a comprehensive home protection plan
If your emergency savings or home repair funds are still a work in progress, consider a Cinch Home Protection Plan. It's a great way to protect your budget, because it limits your out-of-pocket costs when costly breakdowns occur. In many cases you can cover all your major kitchen and laundry appliances, plus your A/C, heating, plumbing and electrical systems, for around $50 per month.  


The information in this article is intended to provide guidance on the proper maintenance and care of systems and appliances in the home. Not all of the topics mentioned are covered by our home warranty or maintenance plans. Please review your home warranty contract carefully to understand your coverage.