Tax Benefits of Home Improvement
Home improvement is the process of making repairs, additions or renovations to an existing property. This could include anything from adding a deck to changing the look of a room.
The market for home improvement is strong and a lot of people are spending money to make their houses more attractive, functional or comfortable. However, it is important to know the differences between improvements that add value and those that don’t.
Some improvements that increase the resale value of your home will be tax deductible at the time you make them. This is because they are deemed capital improvements.
Others will be viewed as renovations that improve the livability of your home, such as installing energy-saving devices or removing toxic materials like asbestos. If you choose to make improvements that increase the resale values of your home, be sure to consult with a real estate professional.
Generally, you can’t get a tax deduction for the material cost of any improvements you do, but they will be tax exempt if you have a certificate of capital improvement (Form ST-124).
A lot of homeowners are making home renovations in order to sell their homes. While this is a good idea, it can be a bit overwhelming and it can be easy to go overboard with home improvements.
Don’t overspend on any one project, or you may end up with debt that is hard to pay off. Instead, make small renovations at a time.