11/04/2024
7 Types of Tax-Deductible Home Improvements
Nearly a quarter of homeowners(link is external) say they’re planning major renovations this year, and some of those projects may be eligible for a tax deduction. This could help alleviate some of the high costs of homeownership.
Here’s an overview of a few examples of tax-deductible home improvements. As always, your clients should consult a tax professional to understand more about who qualifies for deductions.
~Energy-Efficient Upgrades
Homeowners can potentially qualify for an Energy Efficiency Home Improvement Credit(link is external) of up to $3,200 for energy-efficient improvements made after Jan. 1, 2023. The credit for 2024 is 30% of qualified expenses, but it has certain limits depending on the type of improvement.
~Clean Energy Upgrades
Homeowners could potentially qualify for the Residential Clean Energy Credit(link is external) if they install new renewable energy properties in their homes. There is no dollar limit for this credit except for fuel cell properties ($500 for each half-kilowatt of capacity).
~Historic Home Upgrades
The Federal Historic Rehabilitation Tax Credit(link is external) could apply if homeowners are undergoing a renovation of a historic home. Historic homes can qualify for this tax credit and other grants since many organizations wish to preserve historical buildings. Taking advantage of these can help lower the financial burden of potential repairs while helping to restore a home’s original beauty.
~Medically Necessary Upgrades
Homeowners could potentially include medically necessary home upgrades as a part of a medical expense deduction(link is external). These include improvements that help make a home more accommodating for a person with a disability, spouse or dependents that live in the home.
~Home Office Repairs and Improvements
Homeowners may be eligible to deduct home office repair expenses(link is external) if they have a dedicated part of their home that they regularly use as their main place of business. The amount that can be deducted depends on whether the project impacts the entire home or just the office.
~Rental Property Repairs
If homeowners rent out a part of their home, they may be able to deduct repair expenses(link is external) from the amount of taxable rental income they receive.
~Capital Improvements
Capital improvements are projects that extend a home’s life, add value or refit a home for new uses. These differ from home repairs, which are part of property maintenance but don’t necessarily add value (like fixing a leak)
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Michaelyn Born
72SOLD Regional Dir
Realtor - NRG Nat'l Realty Guild
[email protected]