Home improvement tax deductions, what are they? Is painting tax deductible? Is a new roof tax deductible? Lucky for you, we have a list of home improvements that qualify as tax write-offs!
Home Improvement Tax Deductions: What Renovations Are Tax Write-Offs?
1. Home Office Renovations
First, what kind of home improvements are tax deductible? Here’s the bad news: a lot of home improvements aren’t tax deductible. But, the good news is you can include a few renovations as tax write-offs. Chief of these home improvement tax deductions are work-related renovations. Using a section of your home as an office lets you list related expenses as tax deductions. These expenses include utilities, insurance, and other costs.
2. Business-Related Renovations
Like the previous item, if you renovate a section of your home for business purposes, you can get a tax deduction. For example, if you renovate a garage into a dance studio, that counts as a business expense. Also, your home doesn’t even have to be your primary place of business. You can have another main office. So long as you use a part of your home for business purposes, like for meeting or training clients.
3. Energy-Efficient Improvements
Another type of home improvement tax deductions is energy-efficient improvements. These improvements make homes more energy-efficient and include things like solar panels or geothermal pumps. So, if you’re looking for alternatives on electricity, don’t forget to list them as a tax break!
4. Disability or Medical-Related Improvements
The IRS considers disability or medical-related home improvements as tax deductions. These include additions such as wheelchair ramps or elevators. So long as your renovations address specific needs of a people with disabilities or medical conditions, they’re deductible.
5. Daycare-Related Improvements
Here’s a home improvement tax deduction a lot of people don’t know about: daycares! If you run a state-certified daycare at home, it counts as a tax write-off. You don’t even have to use your entire home as a daycare. Just as long as you can prove you use a part of your home to take care of kids, you’re good to go.
6. Repairs Made During Home Improvement Tax Deductions
First, the bad news: home repairs aren’t usually tax deductible. If your windows is broken or your heater clonks out, too bad. You’re on your own. And you can’t count the cost of repairs as a write-off. But, repairs made during qualifying home improvement count as tax deductions! For example, you’re renovating your home office. During construction, you find a leaky pipe. The cost of fixing that leaky pipe can be considered a tax write-off. Because it was fixed during work-related home improvement!
7. Value-Related Home Improvements
Generally, you can’t write off home improvements for personal use. However, home improvements which add to the tax basis of your home can count as tax deductibles. For example, you buy a house for $100,000. Later, you sell it for $200,000. In most cases, the $100,000 profit you made would be subject to tax. But if you can prove that you made $50,000 worth of home improvements to add to the home’s value, then only $50,000 would be subject to tax. Also, you have to be very meticulous when it comes to recording your list of home improvements. So, you can prove that you made this much worth of improvements. And get your tax break.
Don’t forget to download, save, or share this handy infographic for reference:
Watch this video for the home improvements which qualify as tax write-offs:
Home improvement tax deductions, what can be better? You’re improving your home while saving a pretty penny from the IRS. There are plenty of ways to save on taxes all year-long! So, get to making that home-office to boost your income!
Do you have any questions about home improvement tax deductions? Or experiences? Then comment them below!