Home improvements can improve a house’s aesthetic appeal, energy efficiency and functionality, and if they meet certain criteria, those improvements can also give you tax deductions. To get these tax deductions, you need to present proper documentation. Roof Masters, a top roofing company, shows you which records to keep.
General Requirements
It’s important to distinguish between home repairs and home improvements. Home repairs restore some parts of your home to their original condition while home improvements increase the value of your home. Some of the home improvements that qualify for tax deductions are the following:
New siding
New roofing system
New insulation
In addition to these criteria, home improvements would also have to meet the following conditions:
It improves a home’s energy efficiency.
It is for medical reasons.
Its funding came from a home equity line of credit.
Note that for home improvement projects that meet the third condition, only the interest on the loan is tax deductible. It would also need to meet two more conditions:
The loan was secured using your primary residence or the house you live in as collateral.
The loan should be used to substantially improve the property used as collateral.
Required Documentation
Apart from documents showing the property used as collateral is your primary residence, you also need to keep the following:
The home improvement loan contract
Escrow closing statements
Receipts for home improvement expenses
Form 1098 or the mortgage interest statement the lender gave you
It’s good practice to make digital copies of these documents. That way, you can print these out if you need them for your tax returns.
Home Improvements Financed Through Personal Loans
If you used a personal loan to finance your home improvements, unfortunately, the loan interest payments won’t be tax deductible. If you have any doubts about whether or not a home improvement is tax deductible, consult a CPA.
If you’re looking for contractors or roofers to install energy-efficient windows and roofing, why not hire one that won an award for excellent service? Roof Masters was awarded the Angie’s List Super Service Award and received high marks from the Consumers’ Checkbook. To set up an estimate, call (888) 889-7551, or fill out this form. We serve customers in Rockville, MD.