You can avail tax benefits on your home improvements. Yes, this is true. Home improvements increase the value of your house, making it more useful and increasing its lifespan.
Repairs include activities like:
Ways to deduct part of the cost of repairs include renting out a part of your home or deductions from your home office. The business must be legitimate and genuine. 100% of the cost of repairs can be deducted in this way. Cost deduction from the repairs is proportional to the percentage of space used for home office use. There is no deduction for personal home space repairs. For rental space repairs a part is deductible from the rental income received.
Home improvement which lower tax bills include:
1. Energy Generators (Wind turbines, Geothermal heat pumps, Solar water heaters and Solar electric systems). You can receive a tax credit for installing alternative energy equipment in your home. This amount is 30% of the cost of installing the product.
2. Using mortgage to pay for home improvements When improvements are made immediately after purchase and you take a greater mortgage to cover the added expenses. Mortgage interest is also deductible. Loans for home improvement are also tax deductible. Hence, this is a great way to save money on your tax return.
3. Medical Needs. Home improvements are also deductible if a person in the house is disabled. This depends on which medical condition is present. These improvements are tax deductible:
4. Energy efficient additions. Items which can provide up to $500 credit include installing energy efficient windows, doors or skylights.
HERO is a program that helps homeowners save money on energy bills. Until November 2017 homeowners can install high efficiency air conditioning and heating at no cost and lower utility bills. It has easy financing and is paid with tax bill. You can thus save on interest. You will pay less tax and if the property is sold the remaining balance is transferable to the new user. HERO has lower interest rates which might be tax deductible. It is easy to apply, has lower utility bill and is energy efficient.
PACE program encourages water conservation, renewable energy and energy efficient practices. Finance is easily provided for commercial, industrial, residential and non-profit organizations which are investing in the new HVAC systems, solar panels, lighting, insulation, water pumps and other energy efficient devices. 100% financing is provided with long term repayment. This is sponsored by local and state governments. Economic development, environmental protection and job creation are promoted. PACE programs are the Residential PACE Program for the homes and Commercial PACE Program for the businesses.
After installation of the energy efficient heating and cooling system, follow these steps to collect tax deductions:
Total credit will be 10% of the costs and up to $500. Heating/cooling system must be installed by 31st December 2016. There are deductions below $500 for some items which are $50 for main circulating fan, $ 150 for natural gas, propane, oil furnace or hot water boiler, $ 300 for some electric and geothermal heat pumps, central air conditioning systems and natural gas, propane or oil water heaters. Here you can find a buying guide for best tankless water heaters for energy & cost efficiency.
Only some devices will give you tax credits and should include an annual fuel utilization efficiency of:
These criteria can change and must be checked online. Home improvements are tax deductible which is a good way to save cash and live comfortably in newly improved homes.
About the Author:
Dan McKee is the Digital Marketing Manager at Service Champions. He blogs about home improvement and maintenance in his spare time.