How to Handle Home Improvement Expenses at Tax Time
Tax season is almost here, so Wineteer Construction wants to frame for our clients what is and is not tax deductible from your yearly expenses. Minor home repairs, like patching a leaky roof, repainting a room or cleaning carpets, are NOT tax-deductible. However, major home improvements—projects that substantially make a property more valuable or useful—are tax-deductible.
Home improvements happen to be the specialty of both LifeWise Renovations and Wineteer Construction. These capital investments can transform a room into a new function and require a complete addition to the original floor plan or involve major remodeling upgrades to a bathroom or kitchen.
Yet, even though a renovation project is a large investment, you cannot deduct the cost from your yearly federal income taxes. Still, these projects will most likely increase the resale value of your home. So, it is critically important to keep records of these expenses to reduce the taxes you owe when selling your house. A lower tax obligation means more of a profit at the time you sell your home.
Home improvement expenses that can be deducted the same year include installing alternative energy equipment, like solar paneling or wind turbines, or purchasing Energy Star appliances. “Certain energy-saving home improvements can yield tax credits at the time you make them,” according to “Home Improvement and Your Taxes” from TurboTax.
Home improvements can qualify for tax deductions as medical expenses. If a home modification is more about being medically necessary than about increasing the value of your home, deductions can be claimed for materials and installation. To learn more about medically necessary home improvements, read a recent blog from LifeWise Renovations, a Wineteer Company.