It’s very smart to research available tax deductions for your large investments--i.e.your home. If you’re preparing to undergo some remodeling, you may be wondering whether or not there’s a tax break or if any of your remodeling expenses can be tax deductible.
In a nutshell, yes home improvements can be tax deductible. However, there are a few things you’ll need to consider and understand about deducting your home improvements from your taxes, such as what defines a home improvement vs. a repair.
Home Improvement vs. Home Repair
There are a few sticky areas regarding what constitutes a home improvement. Below, we differentiate home improvements vs. repairs and why the difference matters.
Once you’ve differentiated your cost of improvements vs. repairs, you’ll add the improvements to your tax basis in the house--your accountant should be able to help you with this.
Home Improvement
Any work/improvement that substantially added to the value of your home, including:
- Room additions
- New Bathrooms
- Adding square footage
- Fencing
- Landscaping
- Wire, kitchen, bathroom, etc. upgrades
- Adding a swimming pool
- Adding a security system
- Upgrading to storm windows
Repairs
Any work that is done to fix/repair a problem, including:
- Fixing a gutter
- Painting a room
- Replacing a window
Repair or Improve?
As with anything, there is fine print in the tax code, which is why it’s always best to consult with your accountant when making tax deductions.
You may also be eligible for additional tax credits if you install energy-saving installations, such as impact glass windows and doors, when making home improvements. Click the button below to learn more about EPA energy ratings for your windows and doors.
