LESLIE: Well, it’s almost tax time again. Ugh, I hate even saying it out loud. You guys, we are not tax experts and we suffer through this just like the rest of you. But one question we’re frequently asked about, that we do have a pretty good handle on, is which home improvements are tax-deductible.
Now, like everything with our tax systems, it’s beyond complicated and with plenty of ifs, ands or buts. However, this really is the basic idea: if you’ve made an improvement to your home that adds to its value, prolongs its life or adapts it for a new use, you can add the cost of those additions and improvements to the base value of your home when it comes time to sell, which can reduce the taxes that you owe.
TOM: Well, that’s right. And here’s some examples of those kinds of improvements. For example, if you do an addition – if you add on a bedroom or a bathroom or even a deck or a garage or – check this out – a swimming pool, they can qualify. Big system improvements, like new heating or cooling systems or electrical systems or security systems, major upgrades to your outside, like windows or doors or roofs or siding, all deductible. Insulation, kitchen appliances that are built-in, wall-to-wall carpet, all of these things are potentially tax-saving home improvements. But you’ve got to save your records to take advantage of it.
LESLIE: Alright. Now, let’s talk about those things that you cannot – cannot – deduct. These are any costs of repairs or maintenance that are necessary to keeping your home in good condition but don’t add to its value or prolong its life. Now, examples include painting – and that’s the interior or the exterior of your home – fixing leaks, filling holes or cracks or replacing broken hardware.
TOM: So your favorite décor project is out, I guess.
LESLIE: Dang it.
TOM: So listen, be sure you keep good records of what you’ve done and what you’ve spent, because these improvements can definitely help you enjoy your home now and reduce your taxes when it comes time to sell.