Warm weather is here and for many homeowners this is the time of the year that they like to start remodeling and repairing. Did you know that some of your repairs could be use as a write off on your taxes next year?
First, think energy saving. You can get a $500 credit for adding energy efficient materials to your homes. This would include new insulation, new energy efficient windows. Have you been curious about how well those new solar powered water heaters work? Now is a good time to buy one. You can get a $2000 credit for buying a new one of those and installing it in your home.
You may also qualify for a write-off or a partial write-off if the reason for the remodeling is a medical necessity. For instance, a member of your household has been wheelchair bound and you need to add a ramp outside. But remember some of the improvements may also be considered as adding value to your home. The way the IRS will figure this is by defining the medical deduction as the difference between the inflated value of the house and the cost of the upgrade.
Here is a list of some of medical conditions that may warrant home improvements:
making doorways wider or adding wheelchair ramps
installing special handrails in the bathroom
lowering kitchen cabinets to accommodate a wheelchair
installing air filtration or an air-conditioning system
lowering light switches so someone in a wheelchair can reach them
swimming pools, whirlpool baths
having old drywall removed because of mold and then having new drywall hung
But don’t get carried away with the projects. The IRS will look closely at all of them. When filing you will, of course, have to itemize. You also will have to have a statement from your doctor stating that these changes are necessary for your treatment and the statement has to be precise. If your doctor says you need to install an air filter to breathe better, an air conditioning unit will not qualify. Use your head.
It also wouldn’t hurt to have an appraisal of your house done after the repairs have been made, especially if they were big ones. Attach the appraisal to your taxes showing the value of your house now after the improvement. Then the IRS can see how you came to the conclusion of some of your figures.
Your write-offs also must exceed 7.5% of your annual adjusted gross earnings. This sounds impossible. But if it is the head of household who has been ill, you would be surprised how quickly those numbers will drop after an extended illness or injury.
There is one other way your home improvements can work as a write off. You can give whatever materials you have left to a charity such as organization that builds homes for the poor. Then you can claim the fair market value of the goods as a deduction. Just be sure to keep the receipt. You always have to prove everything to the