Owning a home is a part of the American Dream, but it does involve ongoing expenses to maintain the property. Some home remodeling is considered repair to the existing structure, which does not provide the homeowner with tax deductions. However, other home remodeling improves the property, which does provide some tax incentives for the homeowner.
In addition, when a health issue necessitates special enhancements to a home, such as a stair lift, elevator, ramp, or air conditioning, it’s possible to have these medical expenses deducted from annual income taxes. State and federal government agencies often seek to encourage homeowners to make energy-enhancing renovations such as adding insulation or installing energy-efficient appliances. Homeowners can receive tax deductions when they perform these improvements according to government specifications. Home plumbing companies can assist homeowners with questions about these programs.
Improvements to Sell Your Home
- What Home Improvements Are Tax-Deductible? A home improvement might involve adding a room, adding fencing, or performing kitchen upgrades.
- Five Ways Home Improvements Can Qualify for Tax Breaks: By keeping track of money spent on a home for upgrades and improvements, a homeowner may be able to reduce capital gains when selling the house.
- Capital Improvements: For a home improvement to qualify as a capital improvement, it must add substantial value to the property, be affixed to the property, and be a permanent installation.
- Real Estate Laws: Capital Gains: When selling a house, the transaction involves calculating the capital gains by adding costs of improvements and subtracting depreciation from the sales price.
- Seven Little-Known Ways for Homeowners to Save on Their Taxes (PDF): Securing a home equity loan for capital improvements can be a tax deduction for homeowners.
- Home Ownership (PDF): Whether work on a home is tax-deductible may depend on if it is a repair or an improvement. Repairs are generally not deductible, whereas improvements may be deductible.
- Tax Planning Considerations for the Sale of Your Home (PDF): Saving all receipts for improvements made to a home will enable a homeowner to reduce taxes due upon sale of the home.
- Repair or Improvement? Know the Rules (PDF): Painting and wallpapering are repairs, as are fixing leaks in a roof. Improvements involve replacing or remodeling a structure.
- Common Real Estate Tax Deductions (PDF): Securing a home improvement loan enables you to deduct financing points on your income tax return.
- How Home Ownership Affects Your Tax Bill (PDF): If a portion of your home is used to run a business, you may be able to take deductions for this dedicated business space.
- Eight Tax Breaks for Homeowners (PDF): Home damage due to theft or disaster results in a casualty loss, which may give you a deductible.
Medical Renovations to Your Home
- Worksheet for Capital Expenses (PDF): As long as a home improvement is to alleviate a medical condition and you would not have made the improvement without the presence of the condition, you can claim the cost as a medical expense.
- Which Medical Expenses Can Be Paid for With Tax-Deductible HSA Funds? (PDF): Installing an air conditioner, purifier, or elevator can qualify as a medical expense as long as you have a letter of medical necessity from a health provider.
- Capital Improvements as a Medical Expense (PDF): To claim medical expenses, you must itemize your taxes on your federal income tax return.
- As Medical Expenses Rise, Don’t Miss Key Deductions (PDF): Many medical improvements do not increase the market value of a home, so they are completely deductible.
- Deducting Medically Necessary Home Improvements (PDF): Some medically necessary home improvements do increase home value. In this case, the cost of the improvement is deductible to the point that the costs exceed the added value.
- How to Claim a Medical Deduction for Home Improvements: Anyone with a disability can receive benefits to cover expenses for making home improvements.
- Own Your Home? Don’t Forget These Tax Breaks: Installing a ramp for accessibility at a physician’s orders can make this improvement a deductible medical expense.
- Tax Tips for Homeowners (PDF): If the main purpose of a home improvement is due to a medical need, you can deduct the cost to install, maintain, and use the equipment.
- Deducting Medical Expenses (PDF): Deducting a medical expense involves claiming it on Schedule A of Form 1040.
Home Energy Conservation Renovations
- Eight Home Tax Deductions That You May Not Have Known About: Installing new appliances with Energy Star ratings may qualify you for a special tax deduction.
- Energy-Efficient Home Improvements Can Lower Your Taxes: Home improvements that increase energy efficiency can qualify a homeowner for special tax credits.
- Is There a Tax Credit for Corn, Pellet, or Wood-Burning (Biomass) Stoves? Homeowners installing a biomass stove can receive a tax credit for the cost of installation as long as the stove will be used for heat or to heat water and it has a specific thermal efficiency rating.
- Energy Efficiency Tax Credits, Rebates, and Financing: What Options Are Available for You? Installation of a biomass stove, central air conditioning, insulation, roof, water heater, and windows and doors can qualify a homeowner for a tax credit.
- Energy Tax Credits for Home Improvements: Improve Your Home and Your Utility Bills: Homeowners who make a change to alternative energy equipment can receive a property credit.
- Financial Incentives for Energy Improvements: Weatherizing a home can result in rebates or assistance, depending on the program and the homeowner’s eligibility.
- Homeowner Tax Deductions (PDF): Adding insulation and replacing old, drafty windows often qualifies a homeowner for tax credits.
- How Home Improvements Can Impact Your Taxes: Home improvements that add to the value of a home are tax-deductible after the sale of the home.
- Federal Tax Deductions for Home Renovation: There are ways to make home improvements that will provide tax deductions.
- What You Need to Know About Home Improvements and Taxes: Homeowners have a number of ways to recoup some of the expenses of home improvements, depending on the nature of the work and how the improvement impacts the property.