What home improvements are tax-deductible?

Is it possible to deduct home improvements from your tax? What home improvements are exempt from tax if so? These are questions you should ask yourself if your home has been renovated in the last year or if you plan to. Let's get a little deeper.


Are You able to deduct taxes from your home improvement project?

There are many types of home improvements that can be tax-deductible. It all comes down to the type of remodel and whether it is a repair or improvement.


Repairs vs. Home Improvements

Repair is any type of modification to a home that returns it to its original condition and/or value. This definition comes from the IRS. Except for home offices or rental properties, home repairs are not tax-deductible. More information will follow in this guide. TaxSlayer shares some examples of home repairs such as replacing broken window panes or fixing a leaky faucet, replacing broken hardware or replacing a few roof shingles.


Any modification that adds to the home's value is considered an improvement. TaxSlayer lists several improvements as examples, including a new driveway and roof, insulation in attic or a new septic system. Most improvements are tax-deductible. However, some improvements are not deductible until the year of the home's sale.

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If you make a home renovation in 2013, and sell your house in 2020 any deductions that you are eligible for will be included in your 2020 tax return. Even if your intention is not to sell your house in the next year it is important to document all tax-deductible home improvements so that you can maximize the benefits of those upgrades. A local tax accountant can help you determine if a repair or improvement qualifies for tax deduction.


Three Home Improvements that are Tax-Deductible


1. 1. Energy-Efficient Renovations

Types of Savings: Credit

When you can claim it: The same year

A 2020 tax return can be claimed by homeowners for a credit of 10% of qualified energy efficiency improvements and the amount of energy-related property expenses paid or incurred during the year (subject the $500 credit limit).


TaxSlayer shares that tax law changes have reduced the eligibility for the Residential Renewable Energy Tax Credit. However, improvements for solar energy remain intact. The new tax law says that credits for fuel cell improvements, wind, and geothermal are only valid through the tax year 2017. The solar credit will continue until 2019, but it will be reduced each year through 2021.


2. 2. Home improvements for medical care

Types of savings

When you can claim it: The same year

It can be difficult to get tax deductions for home improvement related to medical care. These deductions might not apply to you if you are planning on aging in place. If the main purpose of the equipment is to provide medical care for you, your spouse, or a dependent, then expenses can be included.


These improvements are fully-deductible because they are not considered to increase the value of your home.


A Tax Deduction for Medical Care Home Improvements

Entrance and exit ramps for buildings

Expanding corridors and doors

Kitchen cabinets can be reduced or modified

Lifts can be added from one floor to the next

Support bars for the bathroom

Modifying smoke detectors and fire alarms


3. Home Office Improvements

Types of savings

When you can claim it: The same year

Two requirements are required to qualify for a tax deduction for home office improvements: regular, exclusive use and your home being the principal place of business.


Some of the most significant tax law changes have been made to home offices in recent years. Employees who have their own workspace are not eligible for tax deductions. For those who work for themselves or have their own business, however, home office remodels are still eligible for tax deductions.


If you are eligible for this tax break, repairs and improvements may be eligible. However, they must only be in your home that is used for business purposes. Your home office improvements can be deducted over time as well as depreciation. Repairs are also deductible within the tax year in which they are completed.


Home Improvements for Offices with a Tax Deduction

Direct repairs to your office space

Improvements to your office space

Partially deductible for repairs to other areas of the house

Certain improvements to other areas of your home are partially deductible

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