What Household Maintenances and Repairs Are Tax-Deductible?

Business Use of Your Home

• If you use your home for business purposes as recognized by the IRS, you can deduct the costs of maintenance and repairs done to the portion of your home in which you do business. Keep records and receipts for all maintenance and repairs that you do yourself, or that you hire a contractor to complete. If the business portion of your home isn’t used 100 percent of the time for business purposes, you may only be able to deduct a percentage of your maintenance and repair costs. Check with a tax professional for the most current advice regarding your eligibility for this deduction.
  
  

Renovations

• A fresh coat of paint, fixing broken gutters or roofing and installing new faucets in your kitchen or bathroom are considered home maintenance or repair by the IRS. This means that they aren’t valid tax deductions as of September 2011. However, home renovations or remodeling projects can reduce your capital gains taxes when you sell your home, because you can use an adjusted basis to report the value of your home. So think big: Instead of just installing new faucets in that bathroom, rip it out and renovate the whole thing to add value to your home. That can up the selling price of your home, as well as allowing you to adjust your basis for tax purposes. It isn’t a tax deduction you can take now, but it’s one you’ll be glad about in the future.
  
  

Energy-Efficiency Upgrades

• As of 2011, you are eligible for up to $500 in tax credits for certain home improvements you undertake that make your home more energy efficient. However, these tax credits as currently written expire at the end of 2011, and it is uncertain whether there will be new ones for 2012 and beyond. According to the EnergyStar.gov website, these improvements include certain heating, ventilation and air conditioning improvements; insulation; roofs; water heaters; windows; and doors. See EnergyStar.gov for specific information about what qualifies. Additionally, a 30 percent of cost credit exists for geothermal heat pumps, small wind turbines, solar energy systems and residential fuel cells. That credit expires at the end of 2016 but is subject to certain restrictions as explained on EnergyStar.gov.
  
  

Considerations

• When in doubt, save all receipts from any home maintenance, repair, improvement, renovation or remodeling project you undertake. Consult a tax professional at tax time to find out what deductions or credits you can claim, if any. Keep in mind, too, that federal tax deductions and credits aren’t the only things available to you at any given time. Depending on state and local tax laws, you may be eligible for additional tax deductions and credits at the state and local level. Keep all supporting documentation on hand so you can claim every deduction and tax credit for which your home projects qualify.