4 Tax-Reducing Home Improvement Tips and Tricks
Renovating and improving your home should not be all about aesthetics alone. It is important that improvements go beyond cosmetic reasons, such as lowering your tax bill. So if you want to pay less in tax, or maybe even eliminate it, you must choose renovations where expenses can be deducted from your tax payment or that will get you tax credit.
Tax-reducing home improvements
Install alternative energy equipment
Purchasing and installing alternative energy equipment, such as solar water heaters, solar electric systems, geothermal heat pumps or wind turbines, will get you tax credit of up to 30% of the purchase and installation cost. They may be expensive to acquire initially, but you will get big pay back come tax time and in the years following the installation.
Adding or upgrading energy-efficient equipment
If you swap old house features to energy efficient windows, doors or skylights, you could qualify for credits of up to $500. Unlike alternative energy equipment, these renovations are less expensive. Just make sure any additions installed are Energy Star-rated. You may also qualify for tax credits when you install energy-efficient electric heat pump water heater, main air-circulating fans, central air conditioner, roofing for reduced heat gain, and new insulation.
Adding medical necessities
Do you or a family member need medical tools and facilities at home? A wide variety of medical additions offer potential tax savings, depending on your condition, and the corresponding improvements you make. These include a wheelchair ramp, lowered cabinets, wider doorways, and ground grading for easier access.
Improving home right after purchase
Not all home improvements are tax deductible, but you can turn them into one by taking out a larger mortgage, and then renovating right after a home purchase. Because mortgage interest is deductible, whatever you spent to remodel will become tax deductible.
With these home improvements, you not only give your home a face lift, but also lighten your tax payment.