Window replacement is one of the most common upgrades made by homeowners. Replacing the old windows in your home can be an aesthetic choice or a functional one, but it is sometimes promoted as a sound financial decision as well. Newer, more energy-efficient windows are often sold with the promise that they will reduce energy costs and ultimately pay for themselves over time. While this is technically true, there have been several recent articles questioning the real-world value of this claim. These articles make the case that the real-world energy savings realized by replacement windows are often insufficient to recoup the cost of purchase and installation, but the truth of the matter is more complicated.

Just the Facts

The national average cost to purchase and professionally install a single replacement window is about $500. This cost can be deceptive, however, since the price of a window can vary dramatically by region and by the type of window that is being installed. This average provides a very rough estimate, but the common range for replacing a window can be between $300 and $700, with the largest price factors being brand and size. This means that full window replacement for a home with ten windows would cost roughly $5000, but it could also be as low as $3000 or as high as $7000.

According to the U.S. Department of Energy, Energy Star–compliant windows can save homeowners between $126 and $465 a year. If you are doing the math in your head, then you may already see the issue: even at the high end, it will take energy-efficient windows a very, very long time to pay for themselves.

Case closed? Not quite.

Tax Credits and Resale Value to the Rescue

There are two factors which are often ignored when discussing the financial benefits of replacement windows: the nonbusiness energy tax credit and the impact of new windows on home resale value.

The nonbusiness energy tax credit offers up to 10% of the value of a qualified home improvement (this includes windows) as a tax credit. The catch, unfortunately, is that the benefit is capped at $200 for windows. This won't make much of a dent in your total costs, but it does provide a small incentive.

A much larger factor is the huge increase in resale value that you can gain with new windows. High-end windows will recoup as much as 73% of their total cost in resale value. When this is taken into account, an average window installation can pay for itself in as little as 5–10 years, depending on how much money is saved on heating and cooling. Since modern windows have a decently long lifespan, these are savings that can be realized even if you do not plan to sell your home in the near future.

Are Replacement Windows Worth It?

Installing new windows into your home will improve its appearance and create a warmer, more comfortable environment by eliminating drafts and helping to keep the interior climate under control. There is no doubt that new windows are a worthwhile upgrade, no matter how the energy savings stack ultimately up. Even better, you are likely to see most of your costs ultimately recovered in the value of your home while also saving the environment by using less energy to heat and cool it.

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