Money spent repairing and improving your home is generally money well spent. Maintaining your home well will help save you from more costly repair bills later on. Plus, improvements tend to increase your home value, allowing you to build equity. One question that often comes up as homeowners consider improvements and repairs is this: are the repairs tax deductible? In other words, can you write the money spent on repairs and improvements off on your income taxes?
In most cases, the answer is "no." Since money spent on repairs and improvement is being invested in your own, private residence, the government doesn't typically allow you to deduct those costs. However, there are a few exceptions. The following are some key cases in which your repair or improvement costs may be tax deductible.
1. You're Installing Energy-Efficient Equipment
If you're installing energy-efficient appliances or equipment, you may qualify for certain tax credits or deductions. Right now, there are tax credits available for renewable energy appliances, such as small wind turbines and geothermal heat pumps. These credits are available through 2023.
There were also tax credits available for certain energy efficiency appliances through 2021, so if you made any energy-efficient upgrades this past year, make sure you mention them to your tax preparer.
2. You're Making Improvements for Medical Reasons
If you need to improve your home in order to meet your medical needs, the cost of the improvements may be tax deductible. There are certain qualifications you need to meet. For example, your total medical costs for the year, including the improvements to your home, need to exceed 7.5% of your gross income for you to qualify.
Home improvements made for medical reasons may include adding grab bars to the bathroom, installing a zero-entry or wheelchair accessible shower, adding a ramp to your entryway, and widening your doorways.
3. You Have a Home Business
Do you run a small business out of your home? If you file a Schedule C for your business and claim a home office deduction, you should be able to deduct a portion of the money spent on home improvements and repairs from your business income.
If the improvements are made specifically to your home office, you can deduct 100% of the costs. If the improvements are made to the home in general, then you can deduct a percentage equal to the percentage of your home space that the office occupies. For instance, if your office is 10% of the home, you can deduct 10% of the improvement costs.
Keep in mind that the information above is just mean to be general guidance. For personalized advice regarding your own taxes and finances, reach out to a CPA or tax professional.
Do you need help managing home improvements and repairs? Reach out to Hassle Free Home Services. We offer monthly and quarterly home maintenance plans to fit every schedule and budget. Let us handle the maintenance, and simplify your life.