It’s summer, the perfect time of year to execute the remodeling plans you’ve had all year long. Remodeling a home is exciting, and while you are mainly focused on the mechanics of transforming your home, you might not have considered how a remodel can impact your taxes. Many people are unaware that certain improvements or elements of a home renovation can influence and occasionally minimize taxes. The following are a few ways in which your home renovation can play into your taxes:
Energy Tax Credits
Going green not only serves the environment but can also bring you more money. Consider adding solar energy panels to your home; installing solar panels can reduce energy costs and save you from paying high electric bills. If the panels are placed in service by the end of 2019, you are eligible for a solar-electric tax credit of 30%. Under certain conditions, solar water-heating systems, fuel cells, wind-energy systems, and geothermal heat pumps can also qualify for the credit.
Medical Related Renovations
If someone in your home is confined to a wheelchair, the cost of renovations required to make your home wheelchair accessible can be used as a tax-deductible medical expense. This can include wheelchair ramps, adjustments to make wider doors, lowering cabinets, or adding handrails in the bathroom.
Using Your Mortgage for Home Improvements
If you take out additional money within your mortgage to make improvements at the time it is purchased, the acquisition cost for the home includes this amount. You can deduct the interest on this amount from your income as part of your mortgage interest deduction.
Understanding taxes and possible deductions saves you money. For more information about taxes and additional ways to save money for your business, contact us at Bakersmith Bookkeeping Group. Our team of bookkeepers can help identify areas you can save money for your business. Get in touch with us today!