Is home remodeling tax deductible?

Although remodeling your home can provide you with certain tax benefits, the actual remodeling of your home is not a tax deductions. According to taxes a home improvement project is qualified as any work done to your home that substantially increases the value of your home, improves the useful life of your home, or changes the use of your home. This would be qualified by adding on a room, putting a new bathroom in, adding decking or fencing on the property, improving your landscaping, upgrading electrical, adding walkways or a driveway, kitchen remodel, bathroom remodel, upgrading plumbing, or putting on a new roof. If your home is your personal residence you aren’t able to deduct costs of home improvements. The costs from these projects are nondeductible personal expenses, this is how they are categorized when it comes to taxes. Keep in mind that this does not mean there aren’t any tax benefits to remodeling your home, because there are. Remodel projects can help reduce the amount of tax money you have to pay when it comes time to sell your home for a profit. When you look at the cost of the home improvements being added to the tax basis of the home it shows the benefit. The “basis” just means the amount of money you have invested into your home for tax purposes. The larger basis you have themes profit you will take when you sell your home. If you are looking to increase your basis then home improvements are the way to go because this is the most common way that homeowners do actually increase their basis of their property. If you have improvements that were made to the home but then those improvements were later removed then you can’t include that amount in the basis. For example if you put in a stone walkway and then later came back and took the stone out and replaced it with concrete, you wouldn’t be able to included the expenses from the original stone walk way because you took it out. Even though it is impossible to deduct home improvements you can actually depreciate them. If you deduct the cost of the project over several years, you can do this. A range from 3 to 27.5 years actually. If you want to qualify to have your home improvement costs depreciated you have to use a section of your home for something other than a personal residence. 


A way that people qualify for depreciating home improvement costs is by having a home office for their business. If you use a room in your house as a business office you can do this. You have to have a legit business though in order to qualify for this, and you must be using your home regularly and exclusively for this. If you happen to be qualified for this deduction you can deduct up to 100% of the cost of improvements you make just to the area of your home office. As an example, if you have a room you use for an office and you have a remodel crew come in and change the layout of the office room you can included that as a deduction cost if you consider it a business expense and something to improve the business. Adding bookshelves or a custom desk as part of the wall or adding an addition exit door from that room could all be business related. If there is an improvement that benefits your entire house then you can only deduct what percentage your business uses that benefit.