A Guide to Home Improvement Tax Deductions
If you're planning on making some home improvements, there are many things to consider. Did you know that you can get home improvement tax deductions? There are some ways to save money at tax time for homeowners who upgrade or improve their living space. Read on to find out more about tax breaks for homeowners.
One way to get home improvement tax deductions is by making your home more energy efficient. There are several ways to accomplish this. You could install doors, windows or insulation that improves the energy efficiency of your home. If you do this, you can get a tax credit up to $500. This is called the EPACT plan, and also offers benefits for homeowners who purchase solar water heating implements that are not used for pools or hot tubs. This can equal up to thirty percent of the cost but does not exceed $2000.
Where it gets confusing is in respect to repairs and improvements. Repairs and maintenance are not eligible for tax credits because they do not add extra value to the property. This includes things like repairing broken plumbing, fixing broken windows, doors, stairs or anything else that needs repair. However, improvements like installing new siding or adding a home security system would qualify because they increase your home's value.
If you refinance in order to pay for home improvements, you can deduct the loan points in the year of refinance. If only part of the home improvement or equity loan is used to make improvements, then you will only receive tax benefits on that portion.
Sometimes, there are other ways to receive these types of tax breaks. For example, if you install a pool or hot tub due to the medical advice of your doctor, this may be an expense that you can deduct. This gets tricky, so make sure to consult with your tax preparation specialist before deciding to attempt this.
The bottom line is, if you're thinking of making improvements to your home to increase its value or energy efficiency, then you may qualify for home improvement tax deductions. Because this issue can become quite complicated, you'll want to discuss all details and implications with a licensed and experienced tax professional.
Copyright 2006 Jim Sterling - All Rights Reserved
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