Home improvement projects and major renovations are a great way to increase the value of your home, as well as get more enjoyment out of your day to day life. But if you go into a project hoping to claim your latest renovation as a home improvement tax deduction, you may be in for a bit of a let down.
The simple truth is, most home renovations do not qualify for home improvement deductions. The IRS is not willing to give you a break on your taxes for something that will also increase the value of your home and make you money if and when you decide to sell. That would be like your job paying you twice for one day of work. That is not to say, however, that there are no situations where renovations result in a tax break.
If, for instance, you renovated your home with the intent of operating your business from a home office, you may be able to claim part of the renovation as a business expense. But certain requirements must be met. You must be using the home office as a primary source, the office space you use must be used ONLY for the business, or (in the case of employees) there must be a clear benefit and advantage of you working from home over working at the regular place of business. Check with your tax preparer for more information.
But fear not. There are some non business related home improvement tax deductions you can claim, if you explore the world of energy efficiency. Installing structures like solar panels, residential wind turbines, or certain energy efficient systems and appliances can be claimed for a deduction on your taxes. In fact, many people check the deduction list as a means of decided which project to tackle, instead of investigating the deductibility after the fact. Credits vary from year to year, so be sure the information you have is for the most current tax year.
When it comes to home improvement taxes and tax deductions can sometimes creep into your calculations. Know what to expect before you embark on any project. When in doubt, just do it for the sheer joy of improving your home, and the hope of increasing the resale value. Those are the bigger goals anyway.
5 responses to “Does Your Home Renovation Project Qualify for a Tax Deduction?”
I can speak from experience on this one. We finished our basement and thought we’d be able to claim a big deduction, but there was absolutely nothing. We did bump our house value up by a goodly amount, though.
I can speak from experience on this one. We finished our basement and thought we’d be able to claim a big deduction, but there was absolutely nothing. We did bump our house value up by a goodly amount, though.
I can speak from experience on this one. We finished our basement and thought we’d be able to claim a big deduction, but there was absolutely nothing. We did bump our house value up by a goodly amount, though.
I can speak from experience on this one. We finished our basement and thought we’d be able to claim a big deduction, but there was absolutely nothing. We did bump our house value up by a goodly amount, though.
I can speak from experience on this one. We finished our basement and thought we’d be able to claim a big deduction, but there was absolutely nothing. We did bump our house value up by a goodly amount, though.