After one of Gabe Gross' stock market investments gave him a 10-fold return on his money, he decided to bank it -- in his home.

Rather than cash out his equity, he's using $30,000 of his sudden earnings to install new windows, a deck, sunroom and hot tub in his Redwood City, CA triplex.

"I rent out two units and live in one, so I can deduct the improvements as a business expense even though I won't get the home equity loan's interest deduction," said Gross, vice president of sales for Cupertino, CA-based BayNet.Com, a regional listing service.

Move over home equity.

All that disposable income available to home owners to make home improvements isn't just from appreciation.

Home owners bullish about cashing in on returns from stock market investments are also contributing to what the Cambridge, MA-based Center for Housing at Harvard University says is a booming $150 billion-a-year market.

Gross and others like him who use Wall Street earnings to fix up their homes, aren't simply trading stocks for a construction zone in their home. They are effectively reshaping their portfolios with a much safer investment.

"As Americans have more disposable income available to them, they are choosing to remodel or redecorate their homes as well as start more home improvement projects than ever before," according to Third Federal Savings and Loan Association with branches in Florida and Ohio

Home improvements almost always further enhance a home's equity, especially in today's booming economy and those who use stock market money get to save their growing equity for a rainy day.

"Remodeling helps preserve the asset by shoring up its value while enabling families to adapt their homes to contemporary styles, higher health and safety standards and changing household needs," said Nicolas P. Retsinas, director of the Harvard Center for Housing.

Approximately 11 percent of those who do perform home improvements do so specifically to increase their home's resale value.

Those most likely to have stock market investments are also more likely to perform home improvements. As household income rises, say from stock market investments, so too does the probability of undertaking a home improvement project.

As a result, the 11 percent of households with incomes of $100,000 or more account for almost one-fourth of all remodeling expenditures, according to Harvard's study.

Also, Harvard says, the top 10 percent of spenders are typically responsible for more than half of all improvement expenditures.

Trade-up buyers, who also more often use stock market money to trade up in high-end areas like Silicon Valley, CA, spend the most on remodeling within the first 24 months after purchasing a home.

Home owners should be aware of the tax implications of cashing in stock early, for any purpose.

"You should generally avoid selling within the first year of ownership because such (stock investment) profits are taxed at the relatively high ordinary income tax rates (as high as 39 percent). When you sell an appreciated asset held for more than one year, you qualify for the lower long-term federal capital gains tax rates which are capped at 20 percent (10 percent for those normally in the 15 percent federal income tax bracket)," said Eric Tyson, a financial counselor and author of "Personal Finance for Dummies" (IDG Books)

Home owners who have been at it for a while also are contributing to the trend.

"I've been in the stock market for 15 years. For the first time in my life I have a stock that increased in a very short period," said Gross.

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Published: January 27, 2000

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.