If you’ve made renovations to your home or business in the last year, you’ve made a valuable investment. And as with any investment, you may be able to make a sizeable deduction on your taxes or receive a tax credit, whether filing as an individual or as the head of a business. It’s important to know what credits are available to you if you are considering making improvements to your home or business, or if you are filing this year after renovating your work or living space last year.
For homeowners who have made improvements to their primary residence in the past year, there are several options to offset any tax burdens, depending on the type of renovation and the reason.
Purchasing an existing home often means having to make improvements before even moving in. Many homebuyers have been able to calculate these expenses ahead of the purchase, and qualify for a mortgage that covers the renovations as well as the repairs. Tax laws allow you to deduct the interest on the portion of the mortgage used to cover these repairs if the repairs as part of the mortgage interest deduction. Likewise, renovations made for medical necessity – such as installing ramps or making kitchen or bathroom wheelchair accessible – can be claimed as a medical expense. Additionally, renovating your home’s energy source can qualify you for a tax credit, according to Turbo Tax. Qualifying geothermal, solar, wind or small fuel cells home energy sources can get you a tax credit of 30 percent of the cost, helping to offset the upfront costs of making your home self-sufficient.
For small business owners, any repairs made to the building of operation to restore it to its original condition can be wholly deducted. Likewise, adding energy efficient power, heating and cooling can earn businesses a credit on their tax bill. However, any additions or enlargements of workspace are ineligible to earn tax credits.… Read More