Permanent link All PostsIf you’re thinking of sprucing up your home before the holiday season or prior to putting it up for sale, make sure you know the potential tax implications. Work on your home can be put into two categories: Home Improvements and Home Repairs.
When you make a change to your home that increases its value, it is considered a home improvement. Examples include: roof replacement, adding or removing a pool, replacing carpeting, installing wood flooring, and replacing kitchen cabinets. The cost of improvements to your main home are not deductible at the time the improvements are made, but can be added to the original cost of your to reduce any potential profit when you sell your home, thereby reducing the taxes you would owe on the sale. While you own your home, be sure to keep good records of the cost of improvements you make that add value to your home.
On the other hand, a home repair is maintenance that is done on your home to keep up its condition and is not tax deductible when the home is your primary residence. Repairs include repairing damaged or broken items, such as: fixing a portion of your roof, painting, wallpapering or sanding, refinishing wood floors and re-grouting tile. These types of repairs are regarded as regular maintenance.