January 17, 2018
Is Home Renovation Tax Deductible?
February 9, 2017
Home improvement projects can help to reduce our heating or electric bills, while others are simply there to improve the look of the home itself. Did you know that some home renovations have the possibility of being tax deductible? While most home improvements for a primary personal residence are not tax deductible, there are a few instances when they are.
Home Office Deduction
If you use a portion of your home as an office for business, then any home office renovations would be tax deductible. Some improvements which benefit the entire home, such as having a Maryland bathroom remodeling company redo your first floor bathroom, could also be deducted. This deduction would have to be proportionate to the amount of square footage the home office takes up compared to the other areas which benefit from the improvement.
A home “basis” is the money put into the purchase and overall improvement of a home. When a homeowner sells a home, they are taxed on whatever “profit” was made from the sale. For example, if a home is purchased for $200,000 and then sold for $250,000 there is a taxable profit of $50,000. The only way home renovation could lessen this tax burden would be if a home improvement project contributed to the increased value of the home or “basis”.
A final way home renovations could be tax deductible is if you rent a portion of your home. If you were to pay a kitchen remodeling contractor to install new kitchen flooring in the part of your basement you rent out, then this home renovation would be tax deductible. If the kitchen renovation was to a shared space, then you could deduct 50% of the cost from your taxes.
Solar Tax Credit
In 2017, there are a few government programs which reimburse home owners for installing specific environmentally-friendly home improvements. One Maryland home renovation that is tax deductible is the solar tax credit. This tax credit helps to pay for the cost of any solar panels or solar water heating systems installed on your home.
For more help with home kitchen and bathroom renovations, get in touch with your local bathroom renovation or kitchen renovation company today. The Bath Doctor is a home renovation company that specializes in Maryland bathroom renovations, and Maryland kitchen renovations. For a free estimate, give The Bath Doctor a call at 410-444-4133 or fill out the form on our website today!