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Homespun Executive
Homespun Executive

Home Improvement Tax Breaks You Need to Know

Home Improvement Tax Breaks You Need to Know
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Your home is a constant work in progress, but once a year you stop to look over the changes that have been made over the past year – tax time. April 15 can be a headache, but for the wise home remodeler it can be a nice payday. Tax credits and deductions for homeowners can give you another reason to start your next home improvement project.

The IRS makes a critical distinction between home improvements and home repairs, so it’s important to know what you’re doing before you get yourself too far in over your head (funny how that’s always the case). For tax filing purposes, a home improvement is anything that adds value to your home, extends its useable life, or provides new use. Examples include a new addition, finishing a basement, replacing the roof, or adding landscape. Costs associated with household repairs, like replacing light bulbs, fixing a leaky faucet, or replacing roof shingles, aren’t significant enough to warrant any special tax status.

Additional tax breaks are in store for homeowner who chose energy efficient and sustainable power. Tax credits for solar energy and water heating systems allow homeowners to get back up to 30 percent of the costs of switching to solar. Other tax credits can reap benefits for energy efficient appliances under the Energy Star program.

Many of these tax credits for home owners are self explanatory and covered in step-by-step tax prep software including TurboTax. Of course, the tax code is complicated, and many homeowners opt to work with a CPA after doing major home renovations to make sure they receive every tax break possible without making themselves an easy target for an audit.

US Tax Code gives homeowners many ways to take advantage to home improvements made to their primary home. We have covered some of them here, because getting a little money back is a nice cap on your year of home renovation.

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