Every year as Tax Season approaches, more and more homeowners begin to consider what items and services they might be able to write off that year for house tax deduction and credit. Saving money on taxes can be hard, but there are a surprising number of things that can be done to the home and with the home that can lead to house tax deduction opportunities provided they are done correctly and according to state and national regulations. Here are some of the options homeowners may want to consider as they begin pulling papers and receipts and start working with a tax preparation services provider.
Understanding Taxes, Deductions, and Write-Offs
Tax credits are essentially refunds or discounts given by the government that can help reduce your tax bill on a dollar-for-dollar basis. For example, you qualify for a credit of $500 for one reason or another and $500 is taken off your final tax bill. On the other hand, deductions are what lower your taxable income right from the start and depending on the deductions, they can lower your final costs more than a single tax credit can. There are a number of common home improvements can make that will not only improve the livability of your home but also allow you to reap you benefits of lowering your taxes too. There are multiple tax deductible home improvements to consider and many are ones you may be considering or have done this year already! Understanding what may qualify as a house tax deduction is critical to ensuring you get every discount and reduction you deserve on your taxes.
In general, there are two big distinctions that can determine how house tax deduction works at tax time. These are home improvements vs home repairs. While these may seem to be basically two sides to the same coin, there are differences and one classification can qualify for deductions and tax credits while the other one usually does not.
According to the IRS, qualifying home improvement is work done to a residential building that “substantially adds value to your house, prolongs the life of your home or adapts it to new uses”. Adding a new room, expanding the bathroom, or turning the basement in your home in a living space would all be examples of this sort of qualifying home improvement. As such, these expenses would be tax deductible or tax credits if all other requirements are met.
The IRS defines a repair as “any modification that restores a home to its original state and/or value.” For example, replacing broken or damaged windows would count as upgrading the property and making it better, but simply replacing window screens wouldn’t necessarily count because they are not really adding value to the house. Instead, you are merely restoring the original condition of the property. So installing better windows could count as a deduction, but simple things like changing the screens or adding blinds to the windows won’t get you a house tax deduction.
Understanding this distinction is critical when the time comes to file taxes, and you want to walk that line of finding as many deductions as you can without making a mistake that could get you in trouble with the IRS. That is why many of the tax preparation companies, both online and in persona, offer consulting sessions to help answer these kinds of questions, so homeowners know what will and will not count as a home tax deduction for them. And with that districting in mind, it is time to look at some examples of what might count as a deduction this coming year.
Interior House Tax Deduction Possibilities
The interior living space of your home can provide some good ways to find tax write-offs and deductions.
One of the biggest and most commonly claimed rebate on taxes for the home are energy-efficient appliances. You can talk to your local design and remodeling company to get recommendations about the best appliances that can help you save money now and later on with house tax deduction and rebates. Many appliances today can qualify for this sort of savings including washers and dryers, dishwashers, refrigerators, AC systems, TVs and game consoles, and more.
There are also opportunities to potentially qualify for more rebates on taxes based on premiums paid for homeowner’s insurance, home title insurance, mortgage payments, property taxes, and more. Many of these payments are legally required and so at times, governments kick back a portion of those fees and expenses in the form of rebates, credits, or house tax deduction opportunities to help reduce the burden they have on homeowners.
You may also qualify for savings based on upgrades that you have made to the home itself. Things like newer and more energy-efficient windows and window treatments, improved insulation, and refurbished attic and basement areas may also provide you with additional write-off opportunities when it comes time to file your taxes. Older homes can especially benefit from these sorts of upgrades as they are better than what was used precious and are seen as helping to improve local home values and boost economies and local markets.
Talking with a home tax consultant sooner rather than later can help make the entire process easier and a lot less stressful. These experts can walk you through everything and help you pinpoint what interior house tax deduction items you qualify for.
Exterior House Tax Deduction Possibilities
The potential savings for Tax Season doesn’t stop with your home’s interior as there are several upgrades and renovations that could add to your tax write-offs and give you more house tax deduction opportunities.
While basic home care and maintenance like mowing, powerwashing, and such won’t usually count towards tax credits and deductions, there are other things that can. Things like installing smart sprinkler systems to replace old wasteful ones that use more water than necessary and are not sustainable. You may also find deduction and credit opportunities if you do things like install a pool, add a new garage or shed to the backyard, or do similar construction projects around the property.
Upgrading the home itself can also earn you some small savings here and there as well in certain situations. Major renovations or a full new roofing installation to fix a leaking roof or upgrading to more efficient HVAC systems can be seen as house tax deduction opportunities. Homes with efficient roofing systems, good insulation, and modern seals, and weatherproofing are much more energy efficient which is common deduction homeowners can qualify for on their taxes.
Improving the curb appeal and overall value of your home can also save you money on taxes by giving you greater exemptions write-offs. Things such as gutter repair work, solar panel installations, and siding upgrades can be seen as energy improvements and may qualify for deductions and credits. Adding solar panels to the home is among the most commonly discussed upgrades people are making these days and is also one of the best house tax deduction opportunities homeowners can take advantage of.
If you have questions about whether or not your recent house upgrade or yard work can qualify you for write-offs on your taxes, it is time to speak to a tax preparation professional. They will be able to discuss the details with you and can help you determine if any work you have done to your home’s exterior could qualify for a house tax deduction. Rather than potentially missing out on credits and deductions, you can make sure you get everything you can to help lower your taxes.
Property and House Tax Deduction Possibilities
The final category of improvements that can earn you some deductions on your taxes this year include upgrades made to the property itself. The property you own can also earn you some tax credits and discounts, so it is worth considering what those might entail when you are counting up your home improvements for tax purposes.
Making improvements to pieces of property that you own can qualify you for a couple of different types of deductions on your taxes. If you have cleared property in order to begin building or to make it usable for farming or some other purpose, some of those expenses might be able to be a write-off on your taxes. Clearing or installing roads and access points to the property, so it can be more easily used and accessed might also net you some discounts on upcoming taxes since you are improving the property and making it more valuable.
You can often get some sort of house tax deduction or credit for major improvements you make to the property your home sits on. Basic landscape maintenance like mowing might not count but if you are adding new hardscapes, or installing a deck or patio that may well count for a deduction. Also improving existing property elements can also add some more money to your credits and deductions overall. Buying furniture for your patio, adding a fire pit to the patio, expanding an existing porch, or adding outdoor living spaces to your property are common examples of this kind of home improvement.
Another example of property upgrades to consider for tax write-offs are those that involve improving your home’s overall security. Installing advanced full home fire and break in alarm systems, security cameras, and advanced security surveillance systems often count for tax deduction credits and can be written off at tax time. These upgrades and improvements add value to your home and thus usually satisfy the IRS requirement for counting as a tax deduction opportunity. Adding a security system and upgrading fire and smoke alarms in the home is one of the quickest and easiest ways to qualify for deductions on your taxes.
Getting Help For Tax Preparation and Filing
You can qualify for a range of tax refund credits with home improvements, and so you should since you are investing time and money into your home to make it better for the short term as well as for the long term. However, in many cases, you are only able to claim tax deductions in the year your home improvements were done.
Other types of upgrades and improvements must be claimed over a few years’ time and cannot be taken all in one lump sum. There are also a few elect home improvements that can only be claimed if you sell the property. This can be confusing to determine and calculate, which is why it is important to speak to a certified tax expert about your proposed house tax deductions. They will be able to assist you every step of the way. With their help, you can make sure you are getting all the deductions and credits you qualify for while ensuring you are following all state and national laws and IRS regulations.
Final Thoughts About Home Tax Deductions
Many people get nervous ahead of Tax Season and dread all the paperwork, calculations, and stress that often comes with preparing and filing taxes each year. You can make the process easier and a lot less stressful, while also ensuring you are getting maximum deductions and are paying as little in taxes as you legally can. All you need to do is contact your local tax preparation professionals and schedule a time to speak with them about your specific needs.
They can provide you with custom tax assistance and can handle all the paperwork and specifics that are involved with tax filing and home tax dedication regulations. Contact them today and see what services they have available and be sure to ask about common and not-so-common home improvements and upgrades that can be counted towards tax rebates this year.