Any time you make a major repair or improvement to your home, you want to keep all your receipts forever, for a variety of reasons. One of those reasons is the possibility of a tax deduction. Sure, tax season is over, but the possibility of deducting work on your house may make you think twice about the decisions you make going into the project. Most regular maintenance on a home is not tax deductible. But there are three areas that you need to pay close attention to in what you spend and what you purchase.
Big improvements in your property might not be deductible for the year you install them, but will be important when you sell the house. These capital improvements can be added to the original purchase price of the home, and then be deducted from the selling price, therefore reducing your capital gains tax when you sell. That's why receipts should be kept forever.
Improvements on a business property fall under different rules. Certain improvements can be deducted or be subject to depreciation, depending on whether the building is a business, or rental property, or if you make a living in a home office. The rules for these situations are kind of complicated.
But the best way to get a deduction for your home improvement is with energy efficiency. New insulation, heating and cooling systems, certain doors and windows, and solar panels are all tax deductible in the year you install them. And for the next few years, that includes the cost of installation, too. However, the particular purchase matters, and the percentage that can be deducted varies. Check what you are buying, because spending just a few more dollars now for a qualifying energy-efficient improvement may save you lots more when tax time comes. These methods of making a home improvement into a tax benefit are all explained in detail at Architectural Digest.
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