Tax Deductible Home Improvements

Tax Deductible Home Improvements

If you are planning to make some renovations to your Sanibel home or are considering purchasing a Sanibel home that could use some love to turn it into your ideal Sanibel property you may be interested to know that some home renovations are tax deductible. 

We will go over a list of the most common tax-deductible home improvements that homeowners have utilized and benefitted from. We do want to take a moment to point out that this is not in any way tax advice. Before making these improvements it is best to check with a tax professional about the possible deductions and improvements and if you qualify for them as a Sanibel Island homeowner. 

Home Improvements That Are Tax Deductible

Green Energy Upgrades

There is potential to qualify for a Residential Clean Energy Credit. This credit is for homeowners who install renewable energy fixtures in their homes. It is a great credit with almost no dollar limit. The only limit for monetary amount is in relation to fuel cells which are capped at $500 for each half-kilowatt of capacity. The use of clean energy helps to decrease the usage impact of traditional utilities, lowers the bills of the homeowner, and also provides credits as the homeowner is helping the community with less usage of the system. items like solar panels, a solar power water heater, a geothermal heat pump, and more can all be eligible for the credit. 

Energy Efficient Fixtures

This sounds a lot like a green energy upgrade but it is different. The first one referred to systems that use alternate energy, this covers fixtures that use less energy no matter where the energy is drawn from. This is the Energy Efficiency Home Improvement Credit. The credit can give a homeowner up to 30% credit on qualified expenses. There are limits depending on the specific type of improvement being made. 

Some projects that can qualify for this credit include having a home energy audit conducted, installing ENERGY STAR fixtures like windows, installing a stove to heat your home that burns wood pellets or grasses, etc. 

Improvements to Historic Homes

There is a Federal Historic Rehabilitation Tax Credit. This applies to homeowners with homes that have officially been categorized as historic. There are several organizations on state and federal levels that are interested in preserving the country's history. Historic homes can qualify for credits and grants to help make improvements more affordable. It is worth noting that historic homes are subject to renovations that keep the historic integrity of the home intact. 

Medical Upgrades

Sanibel homeowners may be able to write off medical upgrades to a home under the medical expense deduction. This pertains to improvements or adjustments to a home that makes it more accommodating to a person with a disability. The amount of the deduction depends on the impact the upgrade has on the home value. 

For improvements that increase the value of a home, the deductible expense is considered as the cost of the improvement minus the amount the upgrade has increased the home value. If the value of a home does not increase the entire cost of the project is eligible for deduction. 

Rental Property Repair

For Sanibel, homeowners who rent a portion of their home some repair expenses may be deductible. This is deductible from the amount of taxable rental income a homeowner receives. These improvements of course have regulations and must be improvements made to areas of the home where the tenant is living.

Capital Improvement

A capital improvement is one that is made to extend the life of a home or add value. It can also be used on repairs made to refit the home for a new use. This differs from everyday home improvements that are just routine maintenance. The types of improvements that are eligible are limited. If a homeowner used green energy tax credits they cannot also apply this tax credit. This is a helpful tax credit to apply to the cost basis and help a home seller avoid paying capital gains when selling a home. 

If you are looking to buy or sell a Sanibel home, I am here to help. Contact me any time with any Sanibel real estate needs, for both buying and selling year-round or secondary properties. Let's get your home sold for the best price or find you that next amazing Sanibel property. 

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