RE/MAX of Greensboro & PartnersRE/MAX of Greensboro & Partners

Triad Real Estate: Greensboro, High Point, Kernersville, Winston Salem

336-814-8677

My Account Login | Register
  • Menu
  • Home
  • Search Homes For Sale
  • Home Valuation
  • Meet Our Agents
    • RE/MAX of Greensboro
    • RE/MAX Partners, High Point
  • the Blog
  • Get A Mortgage*
  • Join RE/MAX
  • Contact Us

Best Tax Deductible Home Improvements for Homeowners

Best Tax Deductible Home Improvements For HomeownersBefore delving into tax-deductible home improvements, it’s important to understand that these tax deductions won’t be applied immediately. In most cases, homeowners can only benefit, tax-wise, from their home renovations later, when they sell their home.

It’s important for homeowners to keep receipts for their improvements, though so they have proof of the improvements they made, even if it’s years later when they sell their residence.

Typical Renovations/ Home Improvements That Can Yield Eventual Tax Benefits

A home improvement is any project that substantially adds value to a home. It can include adapting it to be more useful or be improvements that allow it to be used differently. The following are some general home improvements that can yield tax savings when a home is sold for a profit.

  • Room additions.
  • Upgrades to plumbing.
  • Kitchen improvements.
  • A new roof.
  • New bathrooms.
  • Upgraded landscaping.
  • Improvements to fencing.
  • New decks.
  • Improved wiring.
  • New walkways.
  • Driveway improvements.
  • Plumbing upgrades.

How Delayed Tax Benefits Work

While a homeowner can’t take the amount of money they spent on one of the above home improvements and deduct it that same tax year, they can sometimes benefit from the investment in their home. This is true because a homeowner can effectively reduce the amount of taxes they have to pay if they sell their home for a profit down the road.

When an improvement is made, the cost of those improvements are added to the tax basis of a home. The basis is the investment in a home for tax purposes. The greater this number becomes, the less the profit is from selling a home.

The following explains it a little better:

Example Of Tax Basis And Home Improvement Tax Savings

A fictional homeowner purchases their home for $600,000 and sells their home 20 years later for $1,000,000. Their original “profit” from the sale would have been $400,000, which would have been taxable income at the time of the sale. However, throughout the 15 years when they resided in the home, this homeowner made around $60,000 worth of home improvements, including a roof improvement and a kitchen update. The $60,000 is then added to the original investment this homeowner made in their home, bringing their tax basis to $660,000.

The homeowner’s profit when they sell their home is then reduced from $400,000 to $340,000. Many homeowners use home improvements as a way to reduce the amount of taxes they will one day have to pay when they sell their home for a substantial profit.

Other Ways For Homeowners To Benefit From Their Home This Tax Season

Homeowners can make their home work for them each and every tax year by qualifying for the home office deduction. This only works if they own and operate a legitimate business out of their home, though. A part of the home must be used either regularly or exclusively for the business to qualify.

The above is some pertinent information on how homeowners can use home improvements to reduce their tax burden.   As always, check with your trusted tax professional for accurate advice on your personal situation.

Posted in: Real Estate Tagged: Capital Gains, Real Estate, Tax Deduction

Aspire Mortgage

Today’s Rates

Get A Quote

Apply Now


*Affiliated Business Notice

Quick Home Search

Post navigation

« April 2018 National Housing Report
Solar Roof Panels: A Mainstream Option For Homeowners? »

My Account Login

Get The Aspire Mortgage* App

Loanzify Mortgage Calculator

Recent Blog Posts

Once you have decided that you want to put your home up for sale, you should start taking the steps necessary to get it ready to go on the market. While some homes may be almost picture perfect … Continue reading...

Mortgage lenders weigh the risk of getting their principal and interest paid back by looking at the qualities of the prospective borrrower. And due to the amount of money being requested and lent to … Continue reading...

Do rooftop solar panels add value to a home, and are they cost-effective in terms of energy savings? The short answer is yes, say the experts. Although more than a million U.S. homes boasted solar … Continue reading...

News, Tips & Advice

  • Around The Home (268)
  • Chapter 7 Bankruptcy (1)
  • Consumer Tips (1)
  • Credit Scoring (1)
  • Federal Reserve (28)
  • FHFA (2)
  • Financial Reports (27)
  • For Buyers (9)
  • For Sellers (7)
  • Giving Back (3)
  • Happy Thanksgiving (1)
  • Holidays (1)
  • Home Building Tips (5)
  • Home Buyer Tips (194)
  • Home Buying Tips (1)
  • Home Care (3)
  • Home Decorating (2)
  • Home Financing Tips (4)
  • Home Maintenance (1)
  • Home Mortgage (2)
  • Home Mortgage Tips (132)
  • Home Ownership (2)
  • Home Seller Tips (161)
  • Home Selling Tips (26)
  • Home Tips (1)
  • Home Values (6)
  • Homebuyer Tips (5)
  • Homeowner Tips (6)
  • Housing Analysis (189)
  • Housing Market (18)
  • Investment Properties (1)
  • Just For Fun (2)
  • Market Outlook (131)
  • Mortagage Tips (5)
  • Mortgage (14)
  • Mortgage Guidelines (19)
  • Mortgage Rates (150)
  • Mortgage Tips (11)
  • News (73)
  • Personal Finance (25)
  • Rankings (2)
  • RE/MAX Buyer & Seller Tips (1)
  • RE/MAX of Greensboro (17)
  • Real Estate (18)
  • Real Estate 101 (10)
  • Real Estate Definitions (3)
  • Real Estate Tips (43)
  • Real Estate Trends (1)
  • Selling Your Home (1)
  • Statistics (2)
  • Taxes (3)
  • The Economy (20)

Home Buyer Tips

When Is the Right Time to Buy Your First Home? Use This Easy 4 Point Checklist

Are you growing tired of renting? Or perhaps you’ve recently graduated from college and are looking to set down some roots? Whatever the case, buying your first home is an exciting prospect. Let’s take a look at a quick and easy four-point checklist that you can use to determine if you are ready to buy your first home.

Around The Home

The Humble Vegetable Garden: A Fun, Health-conscious Home Project for the Entire Family

Whether you are hunting for a project that will pry the kids away from their phones or you just want a head start on the spring, few home projects are as rewarding as a vegetable garden. Invest a few hours in planting today, some maintenance throughout the year and soon you’ll be enjoying some delicious, home-grown veggies. Ready? Let’s get started!

Home Seller Tips

Selling Your Home FHA? Learn These Tips To Ensure A Smooth Closing

Before an owner can market a property to buyers that want to use a FHA loan, he will want to familiarize himself with the FHA’s standards. FHA won’t insure loans on just any property. While their standards aren’t as stringent as they used to be, a home needs to be in relatively good condition to qualify for FHA financing.

© 2018 ยท Greensboro Real Estate Inc. dba RE/MAX of Greensboro & RE/MAX Partners

Terms of Use | Privacy Policy | *Affiliated Business Notice

Each Office Independently Owned and Operated.
Greensboro Real Estate Inc Supports Equal Housing Opportunity
*Affiliated Business Notice