Tax season is over, but a lot of people are taking on home renovations and remodeling projects to accommodate visitors over the summer months and make their homes more energy efficient. TurboTax has put out a few articles on what types of renovations are tax deductible before you start to save money and rack up credits.
Use your mortgage for home renovations.
If you are buying a new home, it is a great time to factor into your mortgage any fix-ups that might be needed. This can save you money in the long run and red tape down the road. The same can be done with a strategic refinance. You can then deduct the interest on this amount from your income as part of your mortgage interest deduction. Not a bad deal, right? It’s a great time to fix any curb appeal issues such as a new roofing or tackle more complicated jobs like insulation and heating and cooling and window replacement as well.
Check out these tax-deductible home renovations!
Denote repairs made from storms.
In 2017, Hurricane Harvey rendered many homes damaged and when a natural disaster hits, the repairs you need to make can often be considered for deductions and credits as well. Make sure any of these projects, however, are thoroughly documented and completed within a reasonable amount of time to ensure they are eligible.
Deduct renovations made for medical reasons.
Home Remedy helps a lot of our clients with items that fall into what we call “aging-in-place” renovations. When remodeling projects are necessary for medical reasons, such as age, accessibility, loss of limbs and more, you can keep track of these expenses and add them into your tax return for the following year. If you have an elderly family member living with you, it might be a good time to consider what improvements can be made to better accommodate them and get some help paying for it in the process.
Take note and choose energy-saving and energy-generating home improvements.
You can get a federal tax credit of 30% of the cost of qualifying geothermal heat pumps, small wind turbines, solar water heaters, solar panels, or fuel cells placed in service for an existing or new construction home. The credits were good through 2016, except for the solar credits which are good through 2019 and then are reduced each year through the end of 2021. There are also some deductions and credits you can score with energy-efficient central air units and other items to upgrade your home. Just check with your CPA when it comes to tax time again and make sure to keep all manufacturer’s paperwork that would signify its energy efficiency or generation in a safe place.
Qualifying for a home sale exemptions.
Did you know that because home renovations beef up the basis in your home, they can help reduce the amount of your sale price that is counted as profit? Therefore, these projects can potentially help get you under the home sale exemption to avoid capital gains either partially or altogether. This can be a lot of mumbo-jumbo but your CPA or other tax preparation specialist can help you define what all can be under this umbrella and save you a lot of money!
Learn more here from TurboTax. Then give Home Remedy a call so we can help with your aging-in-place, roofing, energy efficiency and more this summer! We are happy to brainstorm and are experts in what can best save you money and make your house a comfortable, beautiful, efficient home with your tax-deductible home renovations!