Unlike business and commercial property renovations, home renovations are usually not tax deductible. However, there is a specific criterion in which they are. Is your home renovation an improvement or the general cost of repairs? Your next home renovation can help reduce your taxes in terms of a home office, renewable energy upgrades, and installation of medical care features.
If you use your home office exclusively for your business, you can include home office improvements in your tax deductions. From the year the renovation is completed, your office space begins to deteriorate. The rate that the overall value depreciates is the rate that you can deduct from your taxes. Your office use must prove regular and exclusive for your business to qualify for this tax write off. You may also consider improvements as a business write off expense.
Renewable Energy Upgrades
There are a variety of home upgrades you can make to your home that improve energy use and qualify for tax credits. Homeowners can currently claim a credit for 10% of the cost of qualified energy-efficiency improvements, and the total amount of energy-related property expenditures (up to $500). Solar systems are also tax friendly resulting in 30% credit of the total installation cost. Solar tax credits start expiring in 2022, so homeowners don’t have long to take advantage. Reduce utility bills, your carbon footprint, and household tax by adding renewable energy upgrades.
Medical Care Features
If you intend living in your home for an extended period, there is a possibility you will at some point need features installed that provide medical assistance. Medical care home improvements can be tax deductible. Deductions can be improvements made to assist you, your spouse, or a dependent. Some features may include a building entrance and exit ramps, lifts from one floor to another, support bars in a bathroom, and modifying fire alarms and smoke detectors. These projects are not considered to be adding to the value of the home, but the useability and are therefore fully tax deductible.
Making a capital improvement to your home adds value, prolongs its life, or adapts the home to new uses. As you make improvements to your home, consider the potential you have to claim tax deductions and benefits. The addition of a home office, renewable energy upgrades, and installing medical care features all fall under the umbrella of home improvement tax breaks.
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