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Archive for the ‘Taxes’ Category

Exposed! How to Deduct Home Improvements

Brought to you by: The Frugal Buzz On September 28, 2010 No Comments

When Are Home Improvements Tax Deductible

Improving one’s home is a necessity over the course of your home ownership. Space grows tight as families grow; roofs need replacing, and so on. Take into consideration when you are doing home improvements that certain improvements are tax deductible. Do your research beforehand so you can get the maximum amount of deductions for the work that you put into improving your house.

In order for a home improvement to be considered tax deductible, it must meet certain conditions. Improvements either have to add to the value of your home, prolong your home’s useful life or be for medical purposes that will allow your home to be used for different purpose. Improvements that are just used to maintain the state of your home are not considered tax deductible, as it is necessary to maintain living quarters.

One of the major tax-deductible home improvements is installing new windows, insulation or water heaters that improve the home’s energy efficiency. To claim the tax deduction or credit, you need to save the receipts of the items that you have purchased and total them up. The receipts will be sent to the IRS as proof that the installation was done and that your home efficiency was improved by such additions.

Medical reasons for improving a home are also tax deductible. Items such as elevators, ramps, widening doorways or installing bathroom handrails for the mobility impaired are considered tax-deductible home improvements. Asthma sufferers can upgrade their cooling and heating systems to have better air filters that will aid in better breathing. This is tax deductible as well.

You will get a further bonus if you install an energy efficient heating or cooling system as well. If you are unsure if your improvement will be tax deductible, contact a tax professional such as a CPA prior to having the work done. You can refer to IRS publication 502 for more information on medical improvements that qualify for a tax deduction or credit.

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