Sunday, February 25, 2007
Claiming A Home Improvement Tax Deduction
By Alison Stevens
The approach of spring often encourages homeowners to start considering home improvements and repairs. However, before you start getting out the hammer and nails or hiring a contractor consider if your home improvements may be eligible for a home improvement tax deduction.
The first thing the homeowner must understand is the difference between a home improvement and a home repair. Simply put, a home repair is classified as fixing a problem. For example, repairing a hole in the roof, fixing a leak or repainting a room would be considered repairs. On the other hand, remodeling a kitchen, adding a couple of rooms, building a garage or installing a swimming pool would be classed as improvements. These improvements add to the living amenity of the home’s owners and usually add value to the home.
The Internal Revenue Service sets out strict guidelines on how a homeowner can claim a home improvement tax deduction. It is strongly recommended that before you hire a contractor or start any home improvement works that you obtain advice from you tax consultant or from the local office of the IRS
Tax deductions for home improvements can fall into any of several different categories. A medical condition that required providing disabled access to home would normally be classed as a home improvement.
There is a special home improvement tax deduction for victims of Hurricane Katrina. Consult with the IRS regarding the Katrina Emergency Tax Relief Act as it increases the permitted qualifying home improvement loans.
If you are planning a home improvement to an area of your home that is in need of repair you may be able to include the repair as an improvement. The Tax Act states that where a repair is carried out in the same area of the home that is being remodeled then the repair can be included as part of the improvement project. So, if you are planning on remodeling your kitchen don’t forget to take care of the leaking pipes at the same time and claim the entire project as a deduction.
Tax Credits vs Tax Deduction
Tax credits can also provide significant savings to the homeowner. Whilst a tax deduction for home improvement can reduce the amount of income on which tax is payable, a tax credit directly reduces the tax itself. Tax credits are available for many types of home improvements. For example, installing insulation, adding energy-efficient windows, and some types of highly efficient equipment for cooling and heating, and solar water heating may all qualify for tax credits.
The IRS has many helpful publications to assist homeowners who are about to embark on home improvements so a visit to their website or calling into a branch office will usually provide the homeowner with a wealth of information.
And when you begin your home improvements remember to maintain accurate records of spending and save all receipts … this will assist you enormously when the time comes to claim your home improvement tax deduction.
Alison Stevens is an online author and maintains The Home Improvement Website to assist homeowners with home improvement tips and information
Article Source: http://EzineArticles.com/?expert=Alison_Stevens
The approach of spring often encourages homeowners to start considering home improvements and repairs. However, before you start getting out the hammer and nails or hiring a contractor consider if your home improvements may be eligible for a home improvement tax deduction.
The first thing the homeowner must understand is the difference between a home improvement and a home repair. Simply put, a home repair is classified as fixing a problem. For example, repairing a hole in the roof, fixing a leak or repainting a room would be considered repairs. On the other hand, remodeling a kitchen, adding a couple of rooms, building a garage or installing a swimming pool would be classed as improvements. These improvements add to the living amenity of the home’s owners and usually add value to the home.
The Internal Revenue Service sets out strict guidelines on how a homeowner can claim a home improvement tax deduction. It is strongly recommended that before you hire a contractor or start any home improvement works that you obtain advice from you tax consultant or from the local office of the IRS
Tax deductions for home improvements can fall into any of several different categories. A medical condition that required providing disabled access to home would normally be classed as a home improvement.
There is a special home improvement tax deduction for victims of Hurricane Katrina. Consult with the IRS regarding the Katrina Emergency Tax Relief Act as it increases the permitted qualifying home improvement loans.
If you are planning a home improvement to an area of your home that is in need of repair you may be able to include the repair as an improvement. The Tax Act states that where a repair is carried out in the same area of the home that is being remodeled then the repair can be included as part of the improvement project. So, if you are planning on remodeling your kitchen don’t forget to take care of the leaking pipes at the same time and claim the entire project as a deduction.
Tax Credits vs Tax Deduction
Tax credits can also provide significant savings to the homeowner. Whilst a tax deduction for home improvement can reduce the amount of income on which tax is payable, a tax credit directly reduces the tax itself. Tax credits are available for many types of home improvements. For example, installing insulation, adding energy-efficient windows, and some types of highly efficient equipment for cooling and heating, and solar water heating may all qualify for tax credits.
The IRS has many helpful publications to assist homeowners who are about to embark on home improvements so a visit to their website or calling into a branch office will usually provide the homeowner with a wealth of information.
And when you begin your home improvements remember to maintain accurate records of spending and save all receipts … this will assist you enormously when the time comes to claim your home improvement tax deduction.
Alison Stevens is an online author and maintains The Home Improvement Website to assist homeowners with home improvement tips and information
Article Source: http://EzineArticles.com/?expert=Alison_Stevens
