Home Projects with Tax Advantages

Another tax season is upon us and also the season for home projects if and when you get a tax refund. Knowing the difference between a tax deduction and tax credit makes all the difference to determine what home improvements to take on.

Per the IRS, tax deductions reduce your taxable income but tax credits reduce the amount of money you may have to pay. When it comes to projects, repairs typically restore while improvements usually upgrade. A leaky faucet, broken roof tile, cracked window – those are repairs. Modifications that increase the value of your home tend to be improvements/upgrades/renovations.

Also to consider is timing. If you make improvements in the same year you sell a home then you can potentially write them off.

Business home office, energy-efficiency, rental property, and medical care projects for example could qualify for tax credits and tax deductions.

Consult with your tax professional if you’re considering home projects to prepare your home to sell or dwell and leverage tax advantages.

Mar

Photo by: @douglassheppard