Can You Write Off Your Kitchen Remodel?
Many home improvement projects are tax deductible. This is because, according to the IRS, any home improvement adds value to your home, which adds value to the market and to the people living in the home.
Repairs to a home are not, in fact, tax deductible. The reasoning for this is a bit confusing, but the essence of it is that, when you repair a home, you are not adding any substantial market value to the home. But, when you repair a home in the context of remodeling it, you are adding direct market value to the home, and the market itself. So, in this sense, if repairing your walls or your floors is part of a larger remodeling project, then you can claim it as a tax deduction and it can be written off.
Remodeling itself is considered a tax deduction. This being the case, there are many different types of home improvements that can be written off. One example is if you need to repair your home or make adjustments to it in order to give a disabled family member, for example, access to the kitchen, then this would fall under that category and it can be written off. So, during your remodeling, make sure to group any repairs and adjustments that need to be made under the remodeling category. That way, they can be written off as a tax deduction, which will save you a good bit of money.
Many of the regulations in place are very complex, and it can be very difficult to know what does and does not qualify as a tax-deductible home improvement. Before beginning your remodeling project, you need to clarify those things and to know exactly what improvements can be written off and which ones cannot. Generally, though, if it is part of a remodeling, then it is tax deductible and can be written off.
If you are working with a contractor, then there is a good chance they will be able to advise you during this process and they will be able to tell you what is and is not tax deductible. However, contractors are not experts in tax laws, so make sure to do three other things.
Talk to your accountant – they should have the answers. Talk to your local IRS office, they will give you definite answers. When you talk to the IRS office, ask for a brochure on home improvement tax laws. This will allow you to remember all the details.
Certain types of home improvements – some of which fall under kitchen remodeling – qualify for tax credits as well as tax deductions. The difference is very simple. A tax deduction comes off your income, so you pay less tax. With a tax credit, it comes directly out of the amount of tax owed. In general, obtaining tax credits ensures that you pay a bit less than you would with just a deductible. To give you a brief example, if you are adding a better heating/cooling system to your kitchen/house, that qualifies for a tax credit.
One final thing to note is that you should make sure to keep all your receipts along with everything else that you can document. That way, if the IRS questions you or wishes to see proof of your remodeling, you will have something to back-up your claims.
In the end, a kitchen remodel can save you a lot of money through tax credits and tax write-offs. Remember that, and take advantage of it by putting those things down and documenting it.