If you’re a homeowner who pays income taxes in the US then you might know that there are a multitude of expenses that you can deduct from your annual income to lower your taxes and save money each year. Sure, you can usually subtract the amount of interest you pay on your mortgage or home equity loans, but there are also a multitude of home expenses and upgrades you can use to reduce your taxable income if you meet certain criteria.
The improvements you make to your home may qualify for income tax deductions or credits depending upon the cost of the project, the need for the home improvement and your complete tax situation. Many home improvements and home upgrades can be counted towards lowering your income if you meet some certain requirements. Sometimes you need to run a business and serve clients in a part of your house to be eligible for these deduction, but there are other deductions you can use even if you don’t work out of your home. Some people have heard about the new energy efficiency tax credits, but you might want to also consider some of the costs of other different home improvement projects too.
Tax deduction for landscaping - A while ago tax courts ruled that if you operate your own business and serve customers regularly at your home you may be able to deduct a portion of your landscaping expenses as a business expense because it makes your business more likely to succeed. You probably will not be able to subtract the entire amount, but rather, you would have to deduct a portion of the cost in proportion to how much your business and living areas share the same house. This is only one of the many possible deductions you can take if you truly run your business out of your home.
Pool tax deduction - Tax rules state that in some cases a portion of the expenses to install a pool can be deducted from your taxes if there is a solid health-related reason to have a pool. In one case a gentleman with low breathing capacity used a swimming pool to exercise and increase his lung strength. Since he used the pool more than his family he was allowed to deduct a portion of the costs as a medical expense. Other health-related devices for the house such as ramps for wheelchairs may also qualify for a deduction. You should also know that the Internal Revenue Service considers a pool and a spa to be the same thing.
Tax creditsfor new windows - If you are planning to upgrade and replace your home’s old windows with new energy efficient ones, now is the time to do it. There are now tax creditsin place for the 30% of the cost of eligible windows, up to $1,500 for the next two years.
To be sure that you are deducting everything you can, you will want to take copious notes, take a lot of photos and obviously organize all your receipts for every possible home improvement expense. If you are planning on finishing some home upgrades this year, you should really investigate the possible tax credits that may be available! Not all home improvements are eligible for tax deductions, but with a little planning you can almost surely save some cash on your income taxes and improve your home at the same time. The rules for income tax deductions are always changing, so it might be helpful to speak with a qualified tax professional about your home improvements to find out of you qualify for any of these special credits.
Still haven’t filed your income taxes? You can often save a bundle of money with just a few minutes of reading about your possible home improvement tax deductions. You don’t need to hire professionals for these savings. Even if you’re a do-it-yourself home improvement amateur, you can save lots of money on projects around your house.
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