It's official. The family has voted to use this year's income tax refund (and a little more that you'll borrow) to put a swimming pool in the backyard. After all, it's a capital improvement to the property, and it's sure to add value to the house when you sell, right?

Maybe yes. Maybe no. Like any other improvement, adding a swimming pool needs to be considered carefully not only from the recreational standpoint but also from the financial standpoint--whether or not its value will be recouped if you decide to sell. Here are the trade-offs.

Pros:

1. You'll know where the kids will be all summer (and probably all the other kids in the neighborhood as well);
2. It's great exercise ...
3. ... and great therapy after a long day's work;
4. Added to the right home in the right neighborhood, a pool can add some value to the home, as well. (Maybe not dollar-for-dollar, but some value.)

Now for the cons:

1. The extra liability insurance will increase your monthly homeowners insurance premiums;
2. You'll be tied to maintaining the pool, including cleaning, covering and uncovering and the endless purchase of chemical additives;
3. A pool added to the wrong property might actually hinder the house's sale, not add value. (Not all home buyers want the hassle and responsibility a pool brings. For example, a pool added to a starter home or other family-sized home where occupants are likely to have toddlers might mean that the house would take longer to sell since the buyer/property fit would be tougher to achieve);
4. And even more likely is installing the pool, only to find that it amounts to over-improved the property. A family might list the house at a price that includes compensation for the improvements, only to be devastated when it ends up barely recouping 50 cents for every dollar the pool cost.

What is the solution? It's two-fold. First, ask your Realtor to show you information about properties like yours (only with pools) that have sold recently. What did they sell for? Did it take them long to sell? Now compare them to properties like yours, but without pools. What is the difference, and is that difference worth the price of installing the pool on your property?

Secondly, it may make more economic sense to sell your current home and purchase one that already has a pool. Again, your Realtor can give you facts and figures about market values to help you weigh the options.

You don't need to be high and dry, without the pool you want. Just make sure it makes sound economic sense before you take the plunge.