All funding improvements to your home are tax deductible. You can’t claim the deduction until you sell it when the cost of developments and other improvements are added to the cost basis of your property. The IRS defines a capital development as a home improvement that adds market value to the home, prolongs its useful life or adapts it to new uses. Minor repairs and maintenance tasks like changing door locks, repairing a leak or repairing a broken window don’t qualify as capital improvements.
Home Additions
New additions to your home are the most noticeable capital improvements. Adding a new bedroom, bathroom, garage, porch or even a satellite dish into your home are valid improvements, according to IRS Publication 523.
Heating and Air Conditioning Systems
You may deduct any expenses expended towards the installation of a new heating system, central air system, water filtration system, a central humidifier or even a fireplace.
Improvements for the Elderly and Infirm
Declare any improvements which produce your home more accessible and helpful for older or infirm individuals, for example bathoroom handrails, stairlifts or ramps.
Outdoor Improvements
Landscaping your garden raises your home’s curb appeal, an excellent means of improving market worth. A new driveway, walkway, fence, retaining wall or swimming pool are tax deductible.
Plumbing Improvements
Plumbing additions like fitting a new water heater, installing a septic tank or attaching a soft-water filter system are considered permanent improvements to the home, according to the IRS.
Substantial Remodeling and Repair Projects
Painting your home and regular maintenance repairs aren’t considered capital improvements. However, the IRS may allow you to deduct them if you are able to prove they are part of a larger project, such as remodeling a kitchen. Extensive repairs to your home after a fire, flood or other serious incident will also be deductible.
Improvements into a Company
All repairs, developments and improvements to your property used in connection with a company, or one which generates income, such as a rental, are tax deductible, regardless of whether they are capital improvements. The businessperson must announce the expense as depreciation to recoup the cost.