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.
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:
Repairs
Any work that is done to fix/repair a problem, including:
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.