If you own your home, then there are probably certain things that you would like to see fixed up. The problem with home remodeling is that it can cost a lot of money. And that money may need to be used to pay your current tax bill. If you are wondering if remodeling your home is tax-deductible and can help save you on your taxes, then you are partially correct.
The current United States tax code does not permit people to renovate their homes and then claim the cost as a tax break on their taxes. The general rule is that there needs to be a reason as to why the federal government should allow something to be used to lower a person’s tax bill.
But there are two ways that you can qualify for a tax break. You may not be able to deduct every expense, but if they are related to the following two improvements, then you might be able to reduce what you pay.
Look at Improving Your Home With Energy Efficient Devices
Energy efficient devices are made to save money. They are designed to use less energy, or they are designed to limit the impact that they are having on the environment. Some of these devices include:
- Solar panels
- Solar water heaters
- Geothermal heat pumps
- Wind turbines
- Fuel cell property
All of these devices are environmentally friendly which is something the federal government wants to reward. You can also claim on devices such as:
- Washing machines
- And other such devices
Only if they meet up to the current standard of reduced energy consumption.
Tax credits are usually defined as an equal deduction to your overall tax bill. What this means is if you spent $300 on solar panels, you would receive that much in a tax credit. And whatever is over what you owe in taxes becomes a refund back into your pocket. It really is a winning scenario for people that have installed such devices in their homes.
Reducing Your Tax Bill With Renovations related to Medical Care
This part of the remodeling process is designed to encourage upgrades to homes that would make it safer for elderly people to live in. The expenses should seek to be related to diagnosis, cures, treatment, prevention and even mitigation of health-related issues.
The thing to remember about such improvements is that they cannot be claimed on your tax form if they were reimbursed through another source. There is a certain limit that you will be given on a standard deduction which makes it easier to track rather than itemizing your expenses. However, if your expenses are greater than the standard deduction, you will want to take the time and list everything out in order to maximize the money that you have coming back to you.
Some of the items that could qualify for such a deduction include installing:
- Construction ramps
- Widening doorways or hallways
- Changing the layout of the staircase or bathroom to make it more accessible
- Installation of handrails and handles around the home
- And other such modifications
You just have to be able to prove that the intent of the modification was not intended to raise the value of the home. If that were the case, then the federal government would allow for only part of the medical modifications to be allowed to be claimed.
Everyone would like to see modifications made to the home while at the same time using the cost to reduce their taxes. But that is just something that is not allowed unless it is for one of the two reasons listed above.
One last thing - the information in this article is of a general nature, so we always advise you to consult your tax professional to determine the specific deductions or credits available depending on your unique circumstances.
Need More Information about Home Remodeling and Construction?
If you have any questions, you can find answers by talking with local Chico and Paradise remodeling contractors today. Our team of Experts are licensed and ready to serve your home remodeling and construction needs.