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Easy Ways to Make the Government Put Money In Your Bank Account and Improve Your Home at the Same Time.
Any improvements you make to your home could be eligible for tax deductions. It is a good rule of thumb to always try to do your home improvements when the interest rates are low. This way, it saves you a lot of money in the long run. Keep in mind though, that only home improvements and not home repair is eligible for the tax deduction. In order to not confuse the two, it is important to know what the difference is between home improvements and home repairs.
Here are just some of the things that are considered capitol expenses and fall into the home improvements category:
-Remodeling the kitchen
-adding a wing to your house
-a new room installing
-new insulation and upgrading the heating or air condition systems
-adding a fence or a pool
Just correcting a problem or fixing something that is broken does not add value to your home. This is just a fix to keep your home from losing value; therefore it makes the work ineligible for tax benefits. Some examples of home repair are as follows:
-Fixing a broken window
-replacing holes in a walls
There are some examples of when a home repair is considered to be a home improvement and can therefore be eligible for tax benefits. For example, if you have an area that is being remodeled and you come across leaks in the roof, then you can claim the entire project as a home improvement. Just keep in mind that there is a fine line and you should probably consult with your tax preparer to make sure that what you have done is considered a home improvement.
A few thing to keep in mind when using your home improvements for tax deductions: For tax purposes, some people refinance to do home improvements because the points are tax deductible. If the project is for home improvement, the points are deductible in the same tax year. If the project is not for home improvements projects, the points are deducted over the life of the loan. If a portion of the money is for home improvement, then that portion is deductible in the same tax year; the remainder of the money is deducted over the life of the loan.
Improving your home will add value. It is also important to note of the extra money you can save by knowing what can and cannot be eligible for tax deductions.
About the Author: C.J.Gannon is a Retired Residential General Contractor and now writes for several construction companies to educate buyers on the construction process so that consumers can make decisions with confidence about their Home Improvement Projects.