A home improvement deduction may fall under any of several different topics, so it is important to explore the situations that are right for you. For example, if a mortgage has been refinanced to pay for a project, the owner of the home may qualify for a legitimate deduction. Likewise, deductions may be claimed if the home is being redesigned to make it handicapped accessible.
A home tax deduction for medical or handicapped purposes may create a substantial tax savings, but only a qualified professional can best counsel you regarding these situations. In addition, it may also be possible to claim a deduction if you are building or improving a home office inside, or attached to the main residence.
Victims of Hurricane Katrina may qualify for a special tax deduction but should consult the IRS regarding the Katrina Emergency Tax Relief Act. In brief, it increases the permitted qualified home improvement loans. Again, a tax specialist can help determine if these victims can claim a special home improvement tax deduction based on their individual situations.
Publications
There are a wide range of publications from the IRS that should be consulted, in whole or in part, before planning to claim a deduction. These include: Publication 936, Home Mortgage Interest Deductions; Publication 502, Medical and Dental Expenses, which will discuss accessibility-related situations of a home improvement tax deduction; Publication 530, Tax Information for First-Time Homeowners; and Publication 554, Older Americans' Tax Guide. All of these may address a deduction based on individual circumstances and your family financial consultant or accountant can help determine the rest.
It is possible that a deduction may fall within several areas on the same form, whether some of it is written off under a refinanced mortgage, handicapped accessibility, or flood damage. It is better not to figure these out yourself, unless you have advanced knowledge of the tax laws and/or are ready to be held personally accountable when a deduction is found to be inconsistent with current laws.
You may call the IRS with additional questions regarding a deduction at 1-800-829-1040 for live assistance, toll-free at 1-800-829-4933 for business assistance, and 1-800-829-4059 for TTD assistance.
Do not wait until the construction is over to determine whether you have a qualified home improvement tax deduction. Good record-keeping throughout the project will make it easier to decide whether your deduction is legitimate, or if additional information and/or authorization is required.
One Last Tip
To some people this might sound like a no-brainer but it's important and quite a few people think that it doesn't apply to them. If you're going to try and get a deduction for imporvements made on your home please be sure that it's valid. Don't try to get something out of the government by lying or stretching the truth about costs involved or anything else to do with the deduction. Sooner or later you'll be found out.
It's come time to make some improvements on your house and the prospect seems daunting. However, there is some light in the darkness, a home improvement tax deduction is available in the right instance. One of the first and most important things to know before trying to qualify for a house improvement tax deduction is the difference between repairs and improvement. The reason being is that repairs will not help you at all when it comes to the tax reduction. Home improvement as defined to qualify for the home improvement tax reduction is any addition that improves life and quality to your home. Some examples include, adding a fence, driveway, swimming pool, new heating or cooling systems, adding a room, building a garage, adding insulation, a new roof or new landscaping.
While repairs on the other hand is something you to slow down or stop any depreciation that may be occurring on your home or property. This does not qualify you for the tax reduction. Just so you know, some examples of home repair that do not qualify you include, repainting, any fixing, plumbing or leaks or fixing any broken items. Of course there is one thing that may make you exempt in regards to home repairs and them not qualifying you for a home improvement tax reduction, and that is in the case of remodeling. In this instance you can include anything under a general improvement of the home to qualify you for the deduction. Just make sure the expenses are closely related.
Something else that can be done when qualifying for a tax deduction involves your interest rate on any loan you may receive to make the improvements. By deducting any loan points in the year you got the loan you can benefit even more. In addition, if you decide to refinance your house to improve it you can deduct the loan points that year. The amount that you use is proportional to the amount of loan points that may be deducted and proportional when calculating the house enahncement tax reduction.
Therefore, now that you are aware what qualifies as improvement and what does not you are all set in qualifying for a home improvement tax deduction. In addition, by knowing what exactly to do to benefit the most from the house enhancement tax deduction you are on your way to saving money, and who doesn't like to do that?
Both William King & Michael Williams are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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