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Are Home Improvements Tax-Deductible?

Sarah Harris

  • Modified 23, October, 2024
  • Created 17, September, 2024
  • 6 min read

Homeowners are responsible for keeping their properties up-to-date. From time to time, that responsibility calls for making improvements. The IRS encourages homeowners to do so by providing the opportunity for tax deductions on certain types of improvements. While some home improvements qualify for tax deductions, others are eligible for tax credits. We’ll highlight the differences between the two tax structures below. But first, let’s look at some home improvements that potentially qualify for a tax deduction in 2024.

What home improvements are tax-deductible in 2024?

In the most general sense, a tax-deductible home improvement is a major renovation that adds value to your home. 

These projects involve making a permanent enhancement, upgrade, or modernization that drives up the property’s cost basis and market value, which is why they’re called “capital improvements.” If you eventually sell your home, such renovations can raise profits from the sale. 

It’s always best to check with a professional financial advisor to know for sure what home improvements are tax-deductible. That said, here are four major categories of capital renovations that are likely to qualify for tax breaks in 2024. 

How much is my home worth?

Use a home value estimator to calculate and access your home’s equity.

What kinds of improvements are not tax-deductible?

Some home renovations that are usually ineligible for tax breaks include: 

  • Routine repairs on roofs, windows, or plumbing 
  • Painting and wallpapering 
  • New carpet installation 
  • Furniture and decorations 
  • Flooring installations not made for energy efficiency 
  • Appliance repair and replacement 
  • Home security system installation 

Allowed deductions can vary according to your area and the relevant tax years. Check with your advisor to learn more about which projects will affect your tax liability. 

Tax deduction vs. tax credit

The differences between tax-deductible improvements and those eligible for tax credits come down to the scope of the work and the value the improvements add. Tax deductions, which reduce your overall taxable income and exposure, are generally reserved for home improvements that permanently increase your property value. 

 By contrast, expenses that qualify for tax credits are usually related to keeping your home up-to-date, especially in terms of energy efficiency. These can include solar panels, insulation, and HVAC installation or upgrades. Consult a professional to learn more about tax credit limits and allowances. 

What are capital improvements?

Capital improvements are those that permanently upgrade homes and result in an uptick in their value. Since they’re tax-deductible and not just discounted credits, you’ll be subject to capital gains taxes if you decide to sell. 

According to the IRS, capital improvements must meet the following conditions to qualify for deductions: 

  • They’re permanent 
  • They substantially increase your property value 
  • They extend the useful life of your home and property 

Make it a point to keep meticulous records related to your home’s capital improvements, as they’ll be crucial come tax season. 

Capital improvements vs. repairs

Home repairs differ from capital improvements in that they only address immediate maintenance needs and restore structures and fixtures to working order. They don’t increase the home’s value in and of themselves — they simply maintain the original condition of the home and its contents. 

Learn more about home improvements and taxes

Are you struggling to make sense of which home improvements can benefit both your home and your tax status? You aren’t alone. To learn more about how these arrangements work — and how you can structure them to your best tax advantage — talk to a qualified financial expert who specializes in home improvement taxes. 

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