How Tax Deductions and Remodeling Work Together!
Are you planning a home project or renovation soon? Did you know that there are many tax benefits available for specific home additions and changes? If you keep careful track of the sort of improvements you are making and how you are paying for them, you could be looking at more deductions when the time comes to file your taxes. We can help you pinpoint the best tax advantages for your project!
Remodel and Get Tax Deductions in the Process
- Home Improvement Loans: When you take out a loan that is specifically classified as a home improvement loan (designed for repairs, upgrades, etc.), remember to check for any tax deductions that you might qualify for. The IRS typically allows homeowners to deduct any interest on these loans, up to $100,000. This is a minor saving for most loans but still allows you to save some money.
- Energy Efficient Appliances: If you are including an energy efficient appliance that reduces the amount of energy you use in your remodel, then you may be able to save on taxes. On the federal level alone, this includes biomass heating, new insulation, new furnaces, air-source heat pumps, skylights, geothermal appliances and a lot more. At the state level, there are even more ways to find deductions if you are spending money on energy efficiency, so look for ways to save money both now and at tax time!
- Preparing to Sell: Here’s a benefit you may not have known about — when preparing to sell your home, any “capital improvements” designed to improve the value of your home can be ticked off on your taxes. That includes very common projects like replacing your roof, replacing windows or doors, and replacing major appliances like your HVAC units. When you sell a home, there is also a home sale exemption that allows you to skip paying capital gains up to a certain amount of profit. Selling can be a crazy time, but don’t let this go unnoticed!
- Medical Renovations: Renovations made for a specific medical need may not only be covered by various programs but can also be deducted as medical expenses. This includes any projects that accommodate disabilities (ramps, new showers, etc.) and similar architecture changes that can be directly linked to a physical medical condition or need.
- FHA Loans: While not exactly a deduction, keep in mind that FHA loans for home improvements come with their own savings, such as more flexible interest rates and down payments, as well as an easy way to get loans for home improvement if you cannot raise capital in other ways.
Considering a home renovation project of your own? Contact Quality Craftsman to learn more about the projects we specialization in and how we can help customize the perfect plan for your house!