Is Home Remodeling Tax Deductible?
We are always looking for new ways to save money. Tax deductions are a great way to do that. There are different activities in your day-to-day life that create expenses, this we all know. Tax deductions are a way to get some of that money back. So what about home remodeling and additions. We all know that is no small expense, so is there a way to get a tax deduction on that money?
Unfortunately, the answer is it depends, but to further explain we will go into what exactly are tax deductions and what kind of home improvements they apply to.
What are tax deductions?
A tax deduction is a reduction of income that is able to be taxed. You may think, well that doesn’t sound good, but it is. Basically, it takes certain expenses into account that lowers your income that is able to be taxed, so you already spent that money. The government will take into consideration expenses that were incurred during the year, and if they meet certain standards then they will deduct those expenses from your income. If you have less taxable income you, therefore, pay fewer taxes. Usually, these expenses need to be in direct correlation of producing additional income.
Can this be applied to home remodeling?
Most people’s homes are for personal use and are not a part of the income. If this is true for you then the answer is no. Expenses that are tax deductible have to be in direct relation with an increase in your income. Since you home is not, then those expenses are not tax deductible.
What about home office remodeling?
For this, the answer is yes. If you work from home, your home is no longer for personal use and is in direct relation to your income. If improving your home office space improves your income in some way, you can record those expense and they will be considered tax deductible.
I hope this answered your questions about home remodeling and tax deductions. If you are having tax problems and need help consider Lothamer, Michigan’s leading tax resolution firm and can help resolve your legal tax issues.