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FINANCE
HOME IMPROVEMENTS
CAN QUALIFY FOR TAX BREAKS
Mby Michael Wiener, E.A. windows installed, repairing rotted wood around the window frames could
ost homeowners know that their home entitles qualify as part of that cost.
them to some federal tax breaks, chief among
them, deductions based on mortgage interest TAX CREDITS FOR ENERGY-SAVING
and property taxes that they pay annually. However, first-time HOME IMPROVEMENTS
home buyers and sellers, and even seasoned homeowners
sometimes miss some important deductions and credits. Most Energy Incentives for Individuals expired at the end of tax year 2013
Selling your home: capital improvements that change your but the Residential Energy Efficient Property Credit is available through
cost basis as soon as you purchase your home, you should start December 31, 2016. Homeowners can benefit from upgrading to certain
alternative energy systems such as: small solar energy systems, geothermal
a file and save receipts, contracts, heat, residential wind turbines, fuel cells and micro turbines.
or other relevant documentation
that show costs for all of your Keep in mind that tax credits reduce your home’s adjusted basis by the
major remodeling and home amount of the credit you receive. Medical home improvements: capital
upgrade projects you make over expenses if you,your spouse,or a dependent requires physical accommodations
the years. When you sell your that necessitate remodeling because of a medical disability, the cost could
home, you may be able to add qualify as a medical expense. Architectural and aesthetic improvements to
the costs of major upgrades to your home do not qualify.
your original purchase price to
increase your adjusted cost basis. If you take out a loan to make capital improvements to your home
The more upgrades, the more you (improvements that increase its value, improve its longevity or modify it for
may be able to reduce your capital new uses), you may be able to deduct the interest on your taxes. Loans for
gains or even show a loss on the sale of your home for tax repairs may not qualify for some home improvement loans. However, home
purposes.The IRS considers the following examples as capital equity lines of credit (HELOCs) can be used for a variety of purposes, and
improvements that may be used to increase your cost basis. some mortgages allow you to make many types of remodels and repairs to
Additions: These include new or expanded rooms that were make a home livable. Interest for these types of mortgage loans on your main
not part of the home you purchased such as extra bedrooms, or second home is typically tax deductible.
bathrooms, a deck, garage, porch, and patio.Things like a new
lawn or xeriscaping,a new driveway,walkway,fence,in-ground It is important to keep in mind that documentation is necessary in order
pool, or retaining wall fall into this category. Home systems: to determine whether or not your home improvements or repairs qualify for
Systems include heating and central A/C, a new furnace, a tax deduction or credit. Please consult with a tax advisor (such as myself )
duct work, security system, upgraded electrical wiring, water so you don’t miss out on the possible benefits that may be available to you.
and air filtration, and central vacuum. An outdoor irrigation
system and new plumbing such as water heaters and modern If you should have a topic that you would like me to
pipes are also part of your home’s systems. Installing new discuss or if you should have a question, please feel free to call
siding, windows and doors, a roof, and even a satellite dish
can qualify to boost your adjusted basis. Flooring (including 239.403.4410 or e-mail me at
carpeting), built-in appliances, and kitchen modernization mike@cctaxandaccounting.com.
count toward increasing your basis.
Adding insulation to your pipes, duct work, walls, attic, An enrolled agent, licensed by the US Department
and floors qualify as upgrades. Most repairs CANNOT be of the Treasury to represent taxpayers before the IRS
included in your basis adjustment unless they are a necessary for audits, collections and appeals. To attain the enrolled agent
part of completing a larger remodeling project. If, for example, designation, candidates must demonstrate expertise in taxation, fulfill
you’re having all your windows restored or replacement continuing education credits and adhere to a stringent code of ethics.
74 Life in Naples | January 2016
