Below, we’ll walk you through the basics aboutdeductinghome renovationand upgrade expenses.
Many taxpayers overpay in taxes year after year by not taking the maximum deductions.
However, some less glamorous, energy-efficient upgrades can save you a few dollars off your taxes this year.
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Can You Deduct Cosmetic Home Upgrades?
Cosmetic upgrades are rarely deductible, but there are a few exceptions.
Have you ever thought about installing a skylight?
Are your windows old and drafty?
Want to replace your old front door?
These upgrades could be eligible for the tax credit if they improve energy usage.
Deductions Arent Unlimited
Like most tax deductions, these upgrades have caps.
The credit has no lifetime limit, which means you might apply for it for eligible expenses every year.
It’s typically structured as a 30 percent credit, with a cap.
So for example, the heat pump tax credit is 30 percent up to $2000.
So if you spend $1000, then you could get a $300 credit.
But if you spend $10000, you could get a $3000 credit.
State deductions may also be available depending on where you live.
Is Decorating Ever Tax Deductible?
Decorating expenses are rarely tax deductible unless they qualify as business expenses.
Small-scale renovations may also be tax deductible, such as having custom cabinetry built to hold supplies or paperwork.
Just be sure to keep all your receipts and inform your accountant.
