Not that you need an excuse for finally tackling your most pressing home improvement projects, but how about getting a break from Uncle Sam?
To many homeowners’ surprises, some home improvements are tax deductible or eligible for home improvement tax credits. In fact, you might want to check out these five ways to make your house healthier, more efficient and more attractive before the year is over.
1. Increasing the Overall Value of Your Home
Perhaps you finally want to upgrade your kitchen. You paid $250,000 for your house and added a $30,000 kitchen. While you cannot deduct the $30,000 on your taxes, you have certainly added to the value of your home. If you sell it next year for $320,000, you can deduct $250,000 plus $30,000 from the sale price. This means you made $40,000 in profit, and that $40,000 will not be taxed.
2. Claiming Your Home Office
Do you regularly conduct work out of a space in your home? You can claim your home office on your taxes, even if you do not work there full time. You do need to have a legitimate business, of course. You also have to use the area exclusively for work.
Typically, home office deductions are relegated to a percentage of the home’s square footage. For example, a home office in a 10′ by 10′ room in a 1,000 square foot home would be about 10% of the total footage. Therefore, you might be eligible for tax deductions equaling 10% of your utility costs.
Check with your accountant to determine just how much you can claim for your home office. Certain improvements, such as adding an overhead fan or carpet in the home office, can be deducted.
3. Renting out a Room or Spaces
Do you take in boarders who rent from you all year or seasonally? You are, therefore, considered a landlord and may be able to deduct expenses for repairs and maintenance of the space.
Remember, though, that if you add hardwood to your entire house, you can only deduct the percentage that falls in the rented-out rooms.
4. Adding Energy Efficient Upgrades
Is it time to consider geothermal, solar or another type of alternative fuel technology to your home? You could potentially realize a one-time credit that allows you to write off a percentage of the cost to purchase and install your new heating or cooling system. You may even be able to extend the savings if you purchase specific types of insulation, doors or windows.
The percentage changes from year to year, so check to see what it is for the equipment you are thinking about buying.
5. Remembering Accidental Losses
While you probably do not like to think about losses that have happened in 2019 due to theft or a catastrophe, they may be partially tax deductible.
One caveat: If your insurance claim paid all your losses from a fire, flood or another disastrous incident, you will not be able to get a tax break on it.
You still have some months left this year. Call your favorite contractor or HVAC installer and start improving your biggest investment! If you have questions about homeowners’ insurance or would like to get a quote, get in touch with us at Strock Insurancetoday.
