When contemplating home upgrades, many homeowners wonder if you can write off home improvements on your taxes. In a general sense, most home improvements do not qualify for tax deductions; however, there are specific exceptions worth noting.
Certain home improvements possess the potential to alleviate your tax burden, particularly those classified as capital improvements or those associated with medical care or energy efficiency. Additionally, if your home serves purposes beyond residential living, you might gain access to further tax advantages. Of course, speak with your tax professional to determine what deductions are available to you.
What Are Some Tax-Deductible Home Improvements
Tax deductions may apply to improvements enhancing energy efficiency, meeting medical needs, maintaining a home office space, or managing a rental property. Below are various examples of home improvements that could be considered eligible renovations:
Enhancements to the exterior of your home, such as a new roof, siding, or windows
Extending the structure of your home
Enhancements to crucial home systems, like heating and cooling setups, security mechanisms, and ductwork
Enhancements to your home’s plumbing, encompassing the septic system, water heater, or filtration system
Enhancements to the lawn and surrounding grounds
Incorporating or substituting insulation
Other enhancements to the interior of the home, including wall-to-wall carpeting, updated flooring, modernizing the kitchen, or integrating built-in appliances
Home Office Deduction
If you use a designated space in your home exclusively and regularly for business purposes, you may claim deductions for certain expenses while filing taxes. To qualify, the home must function as the principal place of business and have a space solely dedicated to regular business use. Both homeowners and renters might deduct expenses such as mortgage interest, insurance, utilities, repairs, maintenance, depreciation, and rent under the home office deduction.
Rental Property Maintenance
Individuals renting out a section of their property might deduct a portion of the adjusted cost basis yearly through depreciation. Improvements made exclusively to the rented-out area could be fully depreciated. Conversely, enhancements benefiting the entire home can be depreciated based on the percentage of the home used for rental purposes. Repairs might also qualify for tax deductions as essential upkeep for the property.
Medical Care Improvements
Renovations aimed at addressing medical requirements, such as ramps or handrails, might qualify for tax deductions. If the primary objective of the improvement is to cater to medical needs for yourself or a household member, or if it permanently raises the home’s value, you might be eligible for this deduction. The IRS considers covered medical expenses as those that aid in “alleviating or preventing a physical or mental disability or illness,” encompassing insurance premiums, transportation for medical care, and long-term care services.
The IRS provides tax credits as incentives for making homes more energy-efficient. Homeowners might receive a credit equivalent to a percentage of the cost of “qualified property” or energy-efficient equipment. This includes expenses related to solar panels, energy-efficient water heaters, and geothermal heat pumps.
Contact PJ Fitzpatrick for Your Next Home Improvement Project
Since 1980, our home improvement company has been assisting Delaware, Maryland, New Jersey, and Pennsylvania homeowners in transforming their homes into the ones they’ve always desired. We offer quality installations and repairs for siding, roofing, gutters, doors, and other items to help make your home a better place. We guarantee that no matter what service we provide, you will be completely satisfied. If you aren’t, please let us know and we will make it right. Contact us today to upgrade your home.