New living room furniture, updates to carpet, and a state of the art new kitchen. If you’ve made some upgrades recently, you maybe looking at your tax return as a way to off set some costs.
But, unfortunately, most home improvements are not tax deductible. However, home improvement tax deductions are available for making your home more energy efficient or making use of renewable energy resources such as solar panels.
Other ways home improvements affect your taxes
If the home renovation is a home improvement, you can add the cost of the improvement to the basis of your home. By adding the cost of improvement to your basis, the gain on your property will decrease when you sell it.
You must keep records of any improvements made to your property. If the cost is a repair, you can’t deduct it nor add it to the basis of your home.
Improvements to your property include:
- Add to its value
- Prolong its useful life
- Adapt it to new use
Improvements include:
- Putting a recreation room in your unfinished basem*nt
- Adding another bathroom or bedroom
- Putting up a fence
- Putting in new plumbing or wiring
- Installing a new roof
- Paving your driveway
A repair keeps your home operating efficiently. It doesn’t add to the value of your home or prolong its life.
Repairs include:
- Repainting your home inside or outside
- Fixing your gutters or floors
- Fixing leaks or plastering
- Replacing broken window panes
