How to Claim a Home Improvement Tax Deduction
When spring arrives many homeowners think about making some repairs and improvements to their houses. Before you start hauling out the tools and buying supplies, you may want to find out if you’re eligible for a home improvement tax deduction. If you have no idea what that is, there are guidelines to use.
The first thing you need to know is the difference between a home repair and a home improvement. An easy way to understand it is that a home repair falls in the category of problem resolution. Fixing a hole in your roof, repairing a leak or painting a room are repairs. However, redoing your kitchen, adding a room or building a garage, or putting in a swimming pool, falls into the category of home improvements, which add value to the home.
Strict guidelines set forth by the Internal Revenue Service will explain how to claim a home improvement tax deduction. Before you start any home improvement project, you are strongly advised to read these guidelines, and get some guidance from the local IRS or a tax consultant. There are several different groups that tax deductions can belong. Even a medical condition can be the cause of a home improvement tax deduction if things need to be permanently changed in the home to accommodate this condition.
Following Hurricane Katrina, a special tax deduction was implemented for the victims of that storm. Talk with the IRS to find out more about the Katrina Emergency Tax Relief Act. It adds to the allowed qualifying home improvement loans.
If there are areas of your home that need repairs but you’re planning improvements there as well, you may be able to claim the repair as an improvement. According to the Tax Act, a repair that occurs in the same part of the house being remodeled can be included as part of the home improvement project.
Homeowners can also take advantage of tax credits to save money. Where a tax deduction for improvements can decrease the income that the tax is payable, a tax credit decreases the tax itself. Tax credits can be had for various home improvements. You can find out more about these ways to save money through the numerous IRS publications available for your use.
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