NEW YORK, NY / ACCESSWIRE / October 7, 2024 / Renovations and repairs are expensive and finding ways to cover those costs can be challenging. A home improvement loan is one way to pay for this, but can homeowners offset some of those expenses by deducting the loan from their state or federal taxes? The answer is not a simple yes or no. The list of tax-deductible home improvements includes the following:
1. Capital Improvements
A capital improvement is a home upgrade that adds value, extends the life of your home, or adapts it for new uses. It may be tax deductible if it lasts more than a year and remains when you sell the property. Examples of capital improvements include, but are not limited to the following:
Additions like bedrooms or bathrooms
Landscaping
Exterior upgrades like a new roof or siding
HVAC system or plumbing upgrades
Interior enhancements
2. Medical Care Improvements
Installing a ramp to facilitate entry and exit for disabled individuals is an expensive undertaking in a situation where medical costs are already high. State and federal governments may offer a tax deduction for these types of home improvements. Other home improvement projects, like widening doorways, adding lifts and railings, or lowering cabinets, also fall into this category.
3. Deducting HELOC Interest for Home Improvement Projects
A remodeling or renovation project to increase the value of a home can be deductible in the year the home is sold. The interest on a HELOC, if that's what's used to fund the project, may be tax deductible in the year the project takes place. This is a complex tax issue, so it's best to seek the advice of an accountant before attempting to claim this deduction.
4. Home Office Improvements and the Self-Employment Deduction
Self-employed individuals who work from home can deduct expenses like office equipment, supplies, utilities, and mileage if applicable. Renovations or repairs on a home office may fall into this category also, depending on how the individual files their taxes. Many take a lump-sum deduction for home office expenses rather than itemizing.
5. Deducting Repairs on Income Properties
Simple repairs like fixing a gutter or painting a room are not deductible for a primary residence that the homeowner resides in. They may be tax deductible for an income property as a cost of doing business. Like most tax issues, this should be discussed with a professional tax preparer or CPA to gain further clarification. Making a mistake could result in penalties and fees.
The Bottom Line
Home improvement projects can provide several benefits, from increasing the value of a person's home to making it more comfortable to live in. And as it turns out, many of these projects are also tax deductible. If a homeowner is considering doing some home improvements this year, they should check out which ones qualify for a deduction on their taxes. They may be able to get a little bit of extra help in offsetting the cost of their project.
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SOURCE: OneMain Financial