Home improvments are an excellent way to update your property, increase comfort and boost resale value. These upgrades can make your house more stylish and energy-efficient, as well as improve storage and organization. Regardless of your reasons for wanting to upgrade, a variety of projects are available that can fit any budget. Some of these updates, however, are not tax-deductible. For more information about the rules on this topic, it’s best to consult a tax professional.
Home improvements are typically considered capital improvements and may be partially or completely tax deductible. According to the IRS, capital improvements include the remodeling, altering, renovating, repairing, restoring, changing, modernizing or adding to any part of a home. This includes adding a deck, installing a swimming pool or building a shed. Other tax-deductible home improvement items include window replacement, insulation installation and driveway repairs. The IRS also allows homeowners to deduct the cost of medical equipment used for aging in place.
While many homeowners love the idea of a new bathroom or kitchen, not every upgrade increases your home’s value. In fact, some projects can actually lower your resale price. So, before you splurge on a two-story deck, read through this list of upgrades that have low return on investment.
1. Crown Molding
Adding crown molding to your home gives it a finished look. This is a great project for DIYers and can be accomplished for less than $200. You can find crown molding at most hardware and home improvement stores.
2. Fresh Paint
A fresh coat of paint is an inexpensive way to refresh your home’s appearance. Repainting a room’s interior or exterior can instantly make it more attractive, especially if you use a color that appeals to a broad range of buyers.
3. Landscape Improvements
A yard that’s well-maintained can significantly increase a home’s curb appeal. Adding a vegetable garden, planting flower beds or mulching shrubbery can give your property an inviting appearance. Likewise, a new front door can help set a positive first impression.
4. Solar Panels
Installing solar panels can reduce your household electricity costs and help you become more environmentally conscious. Although the upfront cost can be high, this is a long-term investment that will save you money in the future. In addition, you can qualify for a federal tax credit for your solar panel purchases. The credits can be worth up to 30% of your initial expenses, which can be a substantial savings. The credits are available for residential and commercial property, including mobile homes. In addition, the credits are available for the purchase and installation of both photovoltaic and solar thermal systems.