Home improvements can provide tax benefits, but not though the traditional deductions you might be familiar with. These methods are specific to tax laws as they regard to real estate, appreciation, and specific home improvements. While they might not all apply to your situation, it’s useful to look through the options and see what’s best for you.
Increase Your Basis
When considering Real Estate, something you need to consider is appreciation of your assets, which impacts the taxes you’ll pay when you sell your home. For example, if you’re selling your home for $600,000 and you bought it for $500,000, you would consider $100,000 the capital gains on the sale, for which you would be taxed on. However, if over that time period you invested $20,000 into home improvements, that money would be added to the original purchase price, so you would subtract $520,000 from $600,000 and pay taxes on an $80,000 gain rather than $100,000.
Home Office Deduction
One way that tax deductions are possible on home improvements are if they are used to build a home office space. You can deduct up to 100% of the money you invest on your home office space because it’s being used for business purposes and not residential. If you already use your home as an office space, this is a great opportunity to add a little extra to it confidently because of this possible deduction.
Renting Out Part of Your Home
Renting out part of your home is another way to depreciate the value of your investment. You can consider any money you put into these improvements part of a rental expense, and deduct it from your taxes. This obviously isn’t for everyone, but if you happen to be looking for roommates and you do own your home then you’re in luck.
Contact Kitchen Centers of Framingham
Tax deductions are a great way to save money, but another way is simply getting the best quote possible and saving the most money on the actual improvements. Whether you’re considering a home office, an upgrade to a rental room or a remodeled kitchen, If you’re considering any home improvements, please feel free to reach out any time during normal business hours. Please give us a call at or by contacting us here.