Different homeowners have different motivations for making upgrades to their residences. Some contemplate resale in a few years and want to maximize their return on investment. Others want to create their dream home and go all-out with major renovations. You may be interested in how improvements may lower your tax burden. While you should consult a tax professional, here are some other things to know.
Medical Home Improvements
Renovations made for medical accommodations for you, your spouse, or any children may be tax-deductible to the extent that they don’t improve the value of your property. In the IRS’ view, getting a tax deduction and an increase in value from a sale would be a double benefit. Medical home improvement deductions can be taken the same year. Not all improvements are created equal. For example, adding handrails to your bathroom wouldn’t impact your value as much as installing an elevator.
Home Office Upgrades
If you use part of your house as a home business, some upgrades involving that space may qualify for deductions. For example, if you’re upgrading the floors throughout your house and your business space makes up 10% of the overall square footage, you may be able to write off 10% of the cost for new floors. That’s something to think about when you’re contemplating upgrading to hardwood stairs Westerly RI.
Home improvements that make your place more energy-efficient aren’t usually tax-deductible; however, some upgrades count as tax credits. Whereas deductions lower your taxable income, tax credits are subtracted from your liability. Depending on your situation, some upgrades may save you more money. It’s strongly recommended that you consult a tax professional before proceeding.
As a property owner, you may have various motivations for upgrading the features of your residence. If lowering your taxes is the goal, you should know that not all changes will provide a benefit. Talk to a tax attorney or knowledgeable professional as you put together a plan.