Are Home Repairs Tax Deductible?
Certain home improvement expenses, like energy efficiency improvements or medical improvements can potentially become tax deductions.
Written by Melanie Krieps Mergen
Reviewed by Melanie Reiff
Certain home improvement expenses, like energy efficiency improvements, medical improvements, or improvements aimed at increasing your home’s resale value might be tax deductible.
In addition to home improvements, certain home repairs to home offices and rental properties may also be tax deductible under certain circumstances.
There are plenty of ways to deduct qualifying home expenses on your taxes, but it’s hard to track them down if you don’t know about them. That’s why the
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is here to give you the rundown on common home improvement expenses that may qualify for tax deductions.Let Jerry find you the best homeowners insurance policy for your needs
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Are home improvement expenses tax deductible?
Under the right circumstances, home improvement expenses can be tax deductible.
Whether your latest home project is tax deductible will typically come down to whether it would be classified as an improvement or a repair, as well as the ultimate purpose of the project.
Improvements vs. repairs
A repair would be a project that would restore your home to its original pre-damaged state or value. That might look like replacing a burst pipe or a cracked siding panel, fixing a gutter, or patching up a hole in your drywall and repainting.
So, is home repair tax deductible? In most cases,
repairs
to your home aren’t going to be tax deductible. However, under certain circumstances, there are a couple exceptions to that, like if the repairs made were to a home office or a rental property. An improvement, on the other hand, would be considered a project that adds value to your home. That could include installing new siding, replacing a furnace, or putting on a new addition.
While not every improvement project will be—for the ones that are eligible for tax deductions, some may be deductible the same tax year you pay for them, while others aren’t tax deductible until the year you sell your home.
Capital improvements for your home
Capital improvements are improvements made to your home that increase its resale value. These improvements can become tax deductible after you sell your home—which makes it important to keep those receipts in a place you can find them when that time comes around.
Examples of capital improvements include:
- Replacing a furnace
- Finishing an attic or a basement
- Building an addition onto your home
- Installing a new roof
- Adding a deck or balcony
- Installing a security system
- Installing a swimming pool in your backyard
Pro Tip The first $250,000 of profit on a home sale of your main residence is tax free for single filing taxpayers, while for those who are married filing jointly, that amount is $500,000. Profits after those amounts could be subject to tax.
Improvements for medical care
If you need to make changes to your home due to your medical needs, or the medical needs of a spouse or dependent, you might qualify for a tax deduction on those expenses. Improvements made to your home out of medical necessity can be tax deductible the year you make them.
Examples of tax-deductible home improvements for medical care include:
- Entrance and exit ramps
- Bathroom support bars and/or accessible bathtubs/showers
- Installing lifts to get up and down stairs
- Widening doorways and/or hallways
- Lowering counters or cabinets
- Adjusting locations of outlets
- House-wide handrails
Pro Tip Some improvements for medical purposes will also increase your home’s overall value, in which case that portion could count toward capital improvements, while the remaining expenses can be counted toward the medical expense deduction.
Improvements for energy efficiency
If you’ve made certain energy efficiency improvements to your home, you could be eligible for renewable energy tax credits.
Those
improvements
could include installations of solar panels, geothermal heat pumps, residential wind turbines, fuel cells, and biomass fuel stoves. The available tax credits are:
- 26% for systems placed in service after December 31, 2019 and before January 1, 2023
- 22% for systems placed in service after 12/31/2022 and before 01/01/2024
Both existing and new construction homes qualify.
Improvements for a home office
If you’re self-employed, you have a home office that’s exclusively dedicated to your business, and you qualify for the home office deduction, repairs that are done directly and exclusively to your home office space can be fully or partially tax-deductible.
Repairs that would benefit your whole house, like repairing a furnace, could also be partially tax deductible. For example, if your home office makes up 15% of your home’s total space, 15% of the cost could be deducted.
Improvements for a rental property
Repairs can be tax deductible for a rental property when they’re made to keep the rental property in good working condition and can be deducted during the tax year when they’re made.
However, things get a little more complicated with rental properties when improvements are made. Improvement expenses made to rental properties aren’t tax deductible. “The cost of improvements is recovered through depreciation,” says the
Internal Revenue Service
(IRS). If you rent out a portion of your own home, it’s possible you could deduct some qualifying improvement expenses from rental income you’ve gotten. Typically, the deduction is going to be proportional to the amount of space in your home that’s rented out (similar to the home office deduction).
The IRS guide to business expenses, including improvements made to leased property, can be found
here
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FAQ
Can you write off home expenses on taxes?
Under the right circumstances, there are plenty of ways to write off home expenses on your taxes. Certain improvements, like energy efficiency improvements, medical improvements, or improvements aimed at increasing your home’s value can potentially become tax deductions. Repairs made to home offices or rental properties could be tax deductible as well.
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