Tax Deductible Home Improvement Projects

Do you have a home remodel project coming up, and wondering if your project is tax-deductible? When doing your home remodels, it is crucial to understand whether that particular project is eligible for a tax write-off. Unlike minor home repairs where you fix little things like fixing broken window pane, some home restorations that add value to your property can earn you tax benefits. For example, adding a new siding, new roofing, plumbing upgrades, new bathroom installation, kitchen remodels, and driveway renovation are some of the major home improvement projects that add more value. In this article, we are going to dig into some of the tax deductible home improvement projects.

Remodeling your home to improve energy efficiency

Are you planning to ditch your old doors and windows for more energy-efficient ones? Your project may be tax-deductible. According to IRS, home improvements that focus on improving its energy efficiency in residential homes are qualify for energy incentives. Installing alternative energy sources like solar panels, wind turbines, solar water heaters, energy-efficient doors and windows, and energy-efficient appliances have a tax credit.

Additionally, your roofing may be eligible for a tax credit if you are using solar roofing shingles and tiles that serve as both the roof and source of energy. If you are renovating the roof, you might opt for solar roofing and get non-refundable tax credits to lower your tax liability.

Making home improvements for resale

Making home improvements for resale is one of the best ways to increase the value of your property. But did you know that remodels on a home that is up for resale are tax-deductible? Your home improvement goal should be to add value, prolong the property’s life span, or adapt to new use. Also, the home restorations should last more than a year. Such improvements are also referred to as capital improvements and qualify for tax deductions at the point of sale. Some of these qualifying home improvements include home additions, roofing, basement remodel, new bathroom, kitchen and attic remodels, garage remodel, driveway renovation, landscaping, siding addition, and new swimming pool, and adding a master suite.

Remember, you must show evidence of expenses you incurred doing the home improvement projects for these improvements to qualify. In this case, you need to capture all the expenses receipts. Keep track of all your expenses on home improvement projects in a file, or you can scan and save them electronically if you plan on selling your house.  

tax deductible home improvement projects

Remodeling a home office

Another tax-deductible home improvement project is remodeling your home office. If you have a designated room at home that serves solely as your home office, you may be eligible for a tax write off under home office deductions. Any expense you incur on a home office that you use to conduct legit business regularly qualifies for a tax break. These expenses include utilities, insurance, repairs, remodels, depreciation and mortgage interests. One unique thing about this tax-deductible home improvement project is that both repairs and remodels made directly to your home office qualify. This is because repairs are indispensable to run your business successfully. 

Rental property improvements

Rental property improvement is also another renovation project that can qualify for a tax break. Like a home office, repairs and remodels on a rental property are eligible for tax deductions. Repairs must keep the rental property in the right habitable conditions to qualify for tax deductions the same year, unlike remodels. Rental property upgrades like a kitchen remodel, floor renovation, room additions, new appliance installation, bathroom remodels, etc., are deductible over time. 

Tax deductible home improvement projects for medical purposes.

Any home improvement you make to accommodate persons with disabilities, a sick patient, or aging in place with doctor’s recommendations qualify for tax deductions. These improvements include medical equipment installations, entrance remodels to include ramps, adding lifts, adding easy-to-reach kitchen cabinets, remodeling the bathrooms, and expanding doorway and hallways.

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