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4 great ways to use your tax refund at home

(MoneyWatch) Nobody enjoys doing their taxes, but nearly everyone is happy when they learn they're getting a refund. It's not "extra" money -- you've essentially given Uncle Sam an interest-free loan out of your pocket -- but it is cash you can make work harder for you by using it wisely.

The typical family gets a tax refund of around $3,000. It's enough cash to take a great vacation, contribute to a Roth IRA, or even buy a whole new wardrobe. But if you want to make an investment that you can enjoy, take a look at investing some or all of your tax refund into your home.

Even in today's lackluster housing market, investing in your home pays off. The trick is doing it right. These improvements will make your home a more comfortable place to live, with the added bonus of giving you a good return on your investment.

Refund amount: $500

If you have a chimney or fireplace, use your tax refund to get it cleaned. A thorough chimney cleaning can help prevent disastrous home fires, which could cost you big bucks. You might even have some money left over to put in savings.

If you don't have a fireplace but still want to spend your refund on your home, consider installing a ceiling fan. This investment will pay for itself by saving you money on heating bills in the winter and air conditioning in the summer.

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Refund amount: $1,000

Replace your old refrigerator or dishwasher with a newer, more energy-efficient model. You'll update the look of your home and save money on utility bills over the course of the year.

Does your home have nice curb appeal? If it's a little boring, invest in some landscaping in the front yard. Many gardening centers have designers on staff who will work with you to create a landscape plan that will turn your neighbors green with envy. You can buy the plants and mulch from the gardening store and plant on your own to save money, or have them put in any big items, like trees or bushes.

You'll be able to enjoy your yard all summer, and you'll make your home more appealing to buyers if you plan to sell in the future.

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Refund amount: $2,000

If you have an old, inefficient water heater, replace it with a newer model. You'll bank additional savings each month from the energy savings. Check your furnace to make sure it's in good working order. If not, use your refund to replace it.

Have your roof inspected for problems and replace any damaged shingles. Check gutters and flashing to make sure rainwater won't pool and can drain correctly. Fixing these problems before they cause leaks will save you money on major repairs. Plus, it looks good to potential buyers who may balk at taking on the cost of roof repairs.

If you choose an energy efficient replacement (like windows or the hot water heater), you may be eligible for some energy tax credits. That'll help you with next year's tax bill.

Refund amount: $3,000

If you hit the jackpot and get a really huge refund, you've got even more options for investing in your home.

Spruce up a small, dated bathroom with a new vanity and countertop, or replace the old flooring with something more modern. If this isn't your forever home, make sure you're choosing finishes neutral enough to appeal to buyers down the road, but are spiffy enough to give your agent something to sell down the line.

Not interested in a messy renovation? Have your home painted, inside or out. Paint will give it a fresh new look without the dust and debris that comes with remodeling. Or, add closet or garage storage. It will make your life more organized and, when you're ready to sell, be a major plus for potential buyers. You might even want to buff or polish your floors. If your stainless steel appliances are looking scratched, you can hire someone to buff those out as well, making your kitchen gleam.

If you're getting a tax refund this year, make sure you're putting the money toward improvements that will pay you back over the long run. You don't need to renovate your entire kitchen to get a return on investment. Instead, focus on smaller, more cost-effective upgrades that will pay off in both the short and long term.

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