Are Home Improvements Tax Deductible?
As tax season quickly approaches, we're sure many of you are thinking about deductions. One specific question we hear a lot is this: are home improvements tax deductible? If you are a financial mastermind, well-versed in the nuances of tax law, whose second Christmas arrives on April 15, the answer is, "Sometimes.” (But you already knew that.) If that last sentence put you to sleep and you prefer your taxes to be of a TurboTax variety, the answer is still “Sometimes." Let's dive in.
First off, what does tax-deductible even mean? Tax-deductible purchases help make up the difference between gross income (i.e., your total earned wages, bonuses, tips, investment income) and your taxable income. Certain purchases, outlined by the Internal Revenue Service (IRS), will lower your ultimate tax liability for the year. Still confused? Totally fine. A safe rule of thumb is: the greater your tax-deductible spending, the less you have to pay on taxes! Sweet!
Now that we have established that tax-deductible is a good thing, are home improvements tax deductible? If your home is simply your personal residence, unfortunately, you cannot deduct home improvements. While there are still tax benefits to be had with large scale value-improving and energy-saving projects, they do not come in the form of tax deductions.
Keep Reading: Which Home Improvements Pay Off?
Now, if your home is also your place of business, you have an opening. If you conduct business in a home office, garage, or even a home gym, home improvement costs can be deducted from your gross income. Exciting, right? So, while this may not apply to everyone if your place of business is also your place of rest, consider investing some of your hard-earned wages in thoughtful home improvement. It might just save you a lot of money!