Home improvement can make your life easier and save you money. Some changes help the environment or make your life more convenient. Others are a necessity due to the age of the home or due to damage. People often ask is home improvement tax deductible? There isn’t a yes or no answer to this. It all depends on what you do and the benefit it provides.
It is a good idea to learn about home improvement tax deduction options before you get started. Some of the projects are going to get done regardless. Others are going to move forward at that time due to the enticement of the tax breaks you earn. Reducing your tax liability is important so you can maximize a refund or reduce the payment you owe.
Are Home Improvements Tax Deductible?
If you do your own taxes, you don’t want to take a deduction you don’t qualify for. This can cause red flags. You may end up audited due to the deductions you took because you weren’t eligible for them. You can owe the government money for those deductions, including penalties and interest they add on top of the dollar amount. On the other hand, you don’t want to pass up deductions because you didn’t know about them.
When home improvement is tax deductible, there are certain guidelines to meet. There can be a maximum dollar amount to claim. If you spent more than that, you can’t claim above the threshold. If you spend less you can only claim what you paid. Make sure you hold on to those receipts for the work in case there is any question about the deduction later on.
As a general rule of thumb, general home improvements can’t be deducted on your taxes. The exception is anything that is energy efficient. Those may get you a tax credit. In certain instances, a home office for an established business or using part of your home for business only can also qualify as a legitimate home improvement expense. If changes are made for medical reasons, that often qualifies for a medical deduction only.
A home office has to be used for that purpose only. The office has to be used for business purposes. Improvements to that part of the home for such a purpose can be tax deductible. Typically, you can only claim the square footage of that area that is used specifically for the business. Determine the total square footage of the home and then the amount of it that falls into this category for the home office.
A home based business may qualify for a home improvement deduction. For example, if you turn the back entrance and area into a beauty salon. Perhaps you are using the back entrance into part of your home that is used exclusively for a daycare. The regulations are strict for this type of deduction. Make sure you know the laws and how they would apply.
A home improvement tax deductible option is the installation of solar panels. They are used to create energy from the sun. The energy collected is turned into electricity used for the home. This reduces the amount of electricity used from non-renewable resources. It is also good for the well-being of the environment. When a home can produce enough electricity from solar panels, they don’t need to use the grid at all!
The solar panel tax credit may apply on two levels. It may be a Federal tax return credit to investigate. In some states, there are also credits available. It is a good idea to find out what is offered under both. Here we will focus on the Federal solar tax credit and what it entails.
Solar Tax Credit
This credit is often referred to as ITC (Investment Tax Credit). For 2020, the deduction is 26% of the cost for the solar panel materials and labor to install them. The credit can be taken both by homeowners and business owners. There is no maximum amount of deduction under this program. Since the cost of solar panels continues to decrease but the amount of energy collected increases, it is worth looking into.
In addition to the 26% tax credit, this investment means reducing or eliminating an electric bill monthly. The cost of electricity is already high, and increases continue to happen regularly. Getting the solar panels installed now allows a household to reap the benefits ongoing. The amount of the ITC credit is going to be reduced in 2021 to 22% and then only 10% in 2022.
Tubular Daylighting System
One of the products to consider with solar energy is the concept of tubular daylight system. This design offers the best technology and allows the most sunlight to be filtered into a structure. This reduces the need to turn on lights during the daytime hours. From the inside, the design of the opening is going to offer the best lighting and a design fitting of the structure.
This type of system consists of many tubular shafts strategically put into place. They are connected to a skylight lens. The sunlight can be filtered into the structure and used as light. It can create up to four times more light than the typical skylight design. This is the ideal way to bring plenty of natural sunlight into your home.
The light is diffused in the home through strategically placed fixtures. They are stylish too so you don’t have to worry about the beauty of your home being compromised. The designs are going to enhance your overall layout. Many of the designs allow you to brighten or dim the amount of sunlight that filters into a given area. Such control over the environment is appreciated.
The value of tubular daylight systems depends on who you rely on for the service. The materials they use, the design of the shafts, and the options within your home all play a role in the outcome. It is essential to compare the options and find a provider with an outstanding reputation. They should be easy to work with, qualified with this type of product, and listen to your needs. They can give you a free quote for the work to allow you to evaluate your budget. They should answer questions you have about the process and the outcome too.
Tubular daylight systems are exciting and worth looking at! Houston Daylighting is an exceptional provider. They have the best training and methods to get it all set up. They are eager to share the technology and products available to obtain such natural lighting. They can come to your home and assess your needs.
Once the assessment is completed, they can share with you the cost and the options. They can help you customize the design to gain the value you seek from it. Houston Daylighting takes pride in their work and they strive to keep prices affordable. They can get the work done in no time at all.
The services they offer do qualify for the solar tax credit. If you have them install the materials before the end of 2020, you can get that 26% credit. If you wait until 2021 you will only be able to claim 22% of the total cost. You have nothing to lose by contacting them for a free quote, but plenty to gain! This includes a free upgrade!
Home Lighting Improvements
If you need better lighting in your home or more lighting, such home improvements won’t be tax deductible. They can be expensive due to the need for a licensed electrician to take care of them. They can be expensive due to the time for the work and the dangers involved in it. Don’t attempt any type of home lighting improvements on your own. The tubular light system professionally installed by Houston Daylighting can get you hassle free results.
Solar Powered Attic Fans
Adding solar powered attic fans to your home can keep it cooler. Since the energy to operate them is provided by the sun, you don’t have to worry about your electric bill going up. However, this can help you to reduce your costs for heating and cooling in your home each month. There are tax credits for this type of home improvement worth looking closer at.
Solar powered attic fans are ideal in the summer when temperatures soar. The fans pull the heat from your structure and the attic. This can help the materials for your roof to remain strong and durable. Extending the life of them will save you plenty of money down the road. Since your home will be cooler, your air conditioning system doesn’t have to work as hard. This can extend the life of it, and such a system is expensive to repair or replace.
Not all consumers realize the value such attic fans offer in the winter. They can reduce the risk of mold or mildew developing in the attic when temperatures change. They can remove extra humidity from the air due to the weather, showers, laundry, and even operating your dishwasher. The solar powered attic fans help keep the structure for your roof durable and healthy in the winter months. Insulation and framing can be damaged or ruined due to winter weather.
Typical Ceiling Fans
Your typical ceiling fans aren’t enough to do all that the solar powered ones can. First, they can be expensive to operate due to the ongoing electricity they use. Installing them on your own can be dangerous due to electrical issues. If you don’t secure them correctly they can come loose and cause damage. There isn’t any type of credit offered for adding ceiling fans to your home either. Go with the solar powered ones to get the most benefits and the home improvement tax deduction.
Solar Powered LED
The use of LED lights is popular as they never get hot and they last for a long time. That is a step further with solar powered LED. Such lighting can provide you with the source you need in hard to reach places. For example, you don’t want dark areas around your home at night. That can be an open invitation to criminal activity.
The solar powered LED lights will collect energy to operate from the sun. They can operate after the sun goes down. Yet you don’t pay for the electricity they use to operate. It is all converted from the sunlight into electricity. There are many types of such solar powered LEDs. They vary in design and wattage.
Find a professional to help you get them set up where you need them. They can identify the best place to mount them. With them in place, you won’t have to worry about the expense of such lights being on when you aren’t home so you don’t arrive at a dark house. You can also have them on all night long and not spend anything beyond the initial cost for the equipment and installation.
Basic LEDs offer a good lighting source and they use less energy than a typical bulb. However, you will still be paying for the electricity when you turn them on. Plus, you won’t get any type of tax deduction for them like you do with the solar powered LED option. Go the extra mile and gain substantial benefits and deductions with the solar energy in use.
Home improvements are tax deductible in certain cases. When the updates allow the home to be energy efficient and reduce the use of other resources they may qualify. Take your time to look at the tax credits offered and how to qualify for them. It is essential to find an outstanding provider to do the work for you and to provide top of the line materials. Your home will be better off and you will save money ongoing. Those tax credits can be a nice bonus too! See what can be done to get you the best results!