With home prices falling and the economy in a serious recession, this isn't the most lucrative time to invest thousands of dollars in a new bathroom, kitchen makeover or other big-ticket remodeling project.

Every dollar you spend won't come close to adding a dollar to the value to your home.

The average return on home improvements slumped to 67.3% last year. That means every dollar spent improving a home boosted its value by 67.3 cents. That's down from 76.1% in 2006 and 70% in 2007.

Still, there are several good reasons to consider a major improvement this year (or one of our 10 smart, low-cost home improvements).

A project that makes your home more beautiful, comfortable or energy-efficient also makes it more enjoyable to live in. Homes are not just an investment, they're where we live.

It's cheap to finance home improvements right now. Most borrowers are paying 5% or less on home equity lines of credit.

You also have a lot of negotiating power because new-home construction is way down and home improvement spending is expected to drop more than 10%.

Contractors are cutting deals they wouldn't have considered a couple of years ago, and sky-high material costs are beginning to drop, making projects less expensive.

But it's still important to know which projects will add the most value to your home.

To do that, we went straight to the mother lode of data -- the annual cost-versus-value home improvement survey by Remodeling Magazine and the National Association of Realtors, which aggregates information from 60 cities.

We used that data to create Interest.com's list of the 10 best home improvements, based strictly on the percentage of the cost recouped at resale.

We pulled out variations on the same themes, such as one kitchen remodeling project instead of minor, midrange and upscale kitchen renovations, which the annual survey breaks out in great detail. In those cases, we gave you the version that produced the highest rate of return.

Our top 10 home improvement projects, with the national average for cost, resale value and the percentage of the cost that was recouped, are:

Improvement 1. Upscale siding replacement costs $13,177 and adds $11,424 to your home's value, or 86.7% of the cost.

Improvement 2. Adding a wooden deck costs $10,601 and adds $8,676 in value, 81.8% of the cost.

Improvement 3. Minor kitchen remodeling costs $21,246 and adds $16,881 in value, 79.5% of the cost.

Improvement 4. Replacing windows with midrange wood windows costs $11,512 and adds $8,946 in value, 77.7% of the cost.

Improvement 5. Midrange bathroom remodeling costs $15,899 and adds $11,857 in value, 74.6% of the cost.

Improvement 6. Renovating an attic into a bedroom costs $48,398 and adds $35,694 in value, 73.8% of the cost.

Improvement 7. Finishing a basement costs $61,011 and adds $44,467 in value, 72.9% of the cost.

Improvement 8. Adding a second story costs $146,538 and adds $103,553 in value, 70.7% of the cost.

Improvement 9. Adding a garage costs $57,272 and adds $38,161 in value, 66.6% of the cost.

Improvement 10. Adding an upscale bathroom costs $74,345 and adds $49,100 in value, 66.1% of the cost.

A minor facelift would include things such as replacing faucets, adding new flooring, new wallpaper or tile, new towel bar and toilet paper holder, maybe new doors for the shower.

Midrange remodeling adds new vanities and countertops, mirrors, medicine chest and maybe pulling the toilet and doing a new tub surround.

A midrange addition involves building a new bathroom with moderately priced fixtures, such as $165 for a solid-surface countertop with built-in sink as opposed to $500 for a custom-ordered sink that you would expect in a luxury addition.

If the prices seem a little more than you expected, there are several reasons:

Averaging can skew costs higher than taking the mean of all costs. Let's say, for example, three people remodeled their kitchens at a cost of $10,000, $15,000 and $100,000. The median price would be $15,000 because half of the projects cost more and half cost less. But the average would be $41,666.

The prices include professional labor, which is about 30% of the cost. There are substantial regional variations in home values, materials and labor costs.

So, how do you decide which project to do and how far to go?

The old maxim of "If a little is good, a lot must be better" does not always apply in the world of real estate.

If the goal of your project is to increase the value of your home for resale, your project needs to reflect the neighborhood.

It's completely within the realm of possibility to spend six figures on a kitchen renovation, but unless you live in a neighborhood of million-dollar houses, you'll want to scale things down.

The same goes with bedroom and bathroom counts. If your neighborhood is mostly three-bedroom, two-bath houses and your house has only one bathroom, you're at a serious disadvantage on the resale market. Adding on a bathroom would make a big difference.

Then, you have to consider all the costs involved with a renovation. A swimming pool is the perfect example.

Building the pool is just the beginning of the expense. The same is true of adding on a family room or remodeling a basement or attic. Not only do you have the structural costs, you also will need to furnish those spaces and heat and cool them year-round. So add those costs into your budget.

Finally, some decisions are made with the heart as much as the head. Maybe you've always wanted a gourmet kitchen, or a trilevel deck with a hot tub and an outdoor kitchen, or a home theater with enough space to have your own rock concert.

You have every intention of living in this house for the rest of your life, you know you'll never get the money out of it that you put into it and you don't care. If you can afford it, knock yourself out. It's your house, your money and your life.

Go for it.

By Darci Smith

Interest.com contributing editor