Home Improvement and Repairs and Taxes: What You Need to Know

Home Improvement and Repairs and Taxes: What You Need to KnowRepairs and improvements aren’t always treated in the same fashion when it comes to taxes.

Your first house may have been far from perfect: the 1970s themed wallpaper, the 40-year-old heater, an out of date refrigerator, and a basement that looked like something straight out of “The Conjuring” movies. Over the years, you may have made the necessary improvements to inch ever closer to the ideal home that you’ve always wanted. You also know that these improvements or repairs hit your wallet, hard. Here are a few rules for sorting out which improvements may lead to tax breaks, and which ones will just leave a hole in your wallet.

The difference between a repair and a home improvement.

Tim Allen may come to mind as the primary difference, but that is not the case (though technically speaking, it is some kind of difference). A repair returns your home to its previous condition, while home improvements make your home better and can boost the value of it.

Deducting home improvements.

Generally, you don’t get a tax break for increasing the value of your home. That is, unless the improvement is to accommodate a disability—installing a wheelchair ramp, for example.

Deducting Repairs.

You’ll need to consider the nature and timing of your repairs. Repairs like painting or patching your walls offer no tax deductions; tax-neutral. Repairs that you make after a fire, hurricane, earthquake, and other natural disasters may be deductible.

Green upgrades.

Energy tax credit may be given to you if you’ve made upgrades to reduce the amount of energy that you consume. Qualified equipment includes: solar panels, solar water heaters, and wind turbines.

Tim Allen would be very proud of you if you were to make these repairs and home improvements. Just be sure to know when and where you can receive these tax breaks. Choose the one that’s right for you! For all of your home buying needs throughout the Solana Beach, California area, contact the professionals at Avis Lending.

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