5 smart ways to use your tax return for homeownership in 2026

As tax season has begun winding down, sizeable returns are beginning to hit bank accounts for many Americans. You may be asking yourself how you can use your tax return to make the smartest financial investment for your future. Tax returns are often used to fund a variety of situations, whether it’s paying for a vacation, stashing away emergency funds, buying a new TV, or playing catch up on bills. Yet homeownership may be one of the most fruitful ways to use your tax return.

Homeownership can be an excellent long-term investment, particularly across the Raleigh-Durham metro area. As an example, homeowners in the Triangle remain equity rich, and many in Wake County have properties worth twice as much as they owe on their homes. The Triangle market isn’t expected to slow any time soon, and it’s become more balanced in recent years. This means homeownership in the Triangle continues to offer long-term stability and strong equity-building potential. That’s especially true when buyers make informed, strategic decisions. And as JAG real estate agent Kim Myers says, even smaller refunds can be used strategically to create value, regardless of whether you’re buying, making updates to a home, or preparing to sell.

If you’re looking for ways to use your tax return to boost your wealth, here are 5 ways you can use it to your benefit for homeownership.

If you already own a home, it may be smart to begin looking into renovations or making updates to increase your home’s equity. A small renovation or update to your home can go a long way toward increasing the wealth you have in your home. Simple updates like fresh paint, flooring, lighting, and energy-efficient improvements can meaningfully increase your home’s value and appeal.

Myers cautioned homeowners to be realistic about what they’re wanting to do in their homes, however. Her recommendation is to find a real estate agent who can help guide you toward the right type of work.

“A good real estate agent will tell you what kind of return you’re going to get on the investment that you put into the property by upgrading,” she said. “And it can be substantial. So not only is there a chance that you get that refund back when you list, but make more on the home when you sell it if you put the money in the right places for upgrades.”

Making one extra payment per year does more than help you pay your mortgage off early. It can also save you thousands of dollars over the life of your loan. If you can dedicate your full tax return to the principal on your mortgage each year, it will go a long way toward helping you increase your wealth in the future, though you’ll want to make sure it’s the smartest investment for your needs.

Talk to your loan servicer before you choose to prepay your mortgage to make sure there are no prepayment penalties involved. And be sure to weigh this option against other financial goals to make sure it’s right for your priorities. 

Myers said one of the smart ways to use tax return money is to make the upgrades you need to list your home and move to your next one.

The best way to determine what to do is to meet with a real estate agent and find out what actually needs to be done in order to get your house ready to list,” he recommended. “It could be something like fresh paint, carpet, flooring, some type of upgrade on light fixtures. It doesn’t necessarily have to be a large refund in order to do some of these things. And you can do whole house painting for about $6,000 if you have somebody do it. If you do it yourself, it could be a lot less than that.”

An experienced real estate agent will help you determine what needs to be done to get the most out of your listing and the total you’ll get back when your home sells.

While many buyers believe a 20% down payment is required, today’s loan options often allow for much less — sometimes as low as 3 to 5%, depending on the loan program. In 2025, the median down payment for first-time buyers was 10%. Still, the more money you can save for a down payment, the better the chances you’ll have to buy a home in the hot Triangle market.

There are many advantages to a higher down payment, including better loan options, lower monthly payments, and savings on private mortgage insurance. Saving money now can put you at an advantage in the long run.

In the Triangle market, due diligence fees are still common when making an offer, and it can vary depending upon competition and strategy. This fee is a deal sweetener and will take the home off the market if your offer is accepted while the home goes through appraisal. The great thing is this fee can be used for closing costs once that time comes.

The more money you have set aside for due diligence, the better off you’ll be when making an offer on the perfect home for your needs.

No matter what phase of homeownership you’re in, you can find a smart use for your tax return to increase your wealth. Be sure to talk to your financial advisor for advice on how to make your return work best for you.