One of the most exciting things to do in your home is to remodel your kitchen. This is because you spend a lot of time in that area of your house. It is where you prepare your family meals, where your kids sit to do homework, and usually where friends and family gather for special occasions. What you may not know is that there could be circumstances where your kitchen remodel could actually be a tax deduction. Marble Concepts explains some of the ways that your renovation could save you money when you file your taxes next year.
Renovation or Repair?
If you are remodeling your kitchen due to a repair, such as a plumbing problem, it is likely you cannot deduct the project from your taxes. If you are updating your kitchen as a remodeling project, however, it is possible you may be able to deduct some of the expenses from your taxes. Therefore, if you have discovered a problem in your kitchen, doing a complete remodel may be financially beneficial, according to granite companies nearby.
Home Office Deduction
If you have a home office, you may be able to deduct a portion of the remodeling costs from your taxes. If someone operates a business from your home, it is likely a larger amount can be deducted as opposed to an office where someone may occasionally work from home. Any improvements to your home that directly benefit your home office can be deducted from 100 percent of the costs. However, even upgrades you make to other areas of your home may be deductible as well. If your home office takes up 10 percent of your home, you can deduct 10 percent of your kitchen remodel as well.
If the kitchen you are upgrading is in a rental property, you can deduct the entire cost from your income. If you rent the entire house, the entire cost is deductible but if you only rent a portion of your home, you can only deduct the amount that equals the percentage of the rental area. Tax experts advise that you install mid-range appliances in a rental unit and keep in mind that you do not need to tear the kitchen down to the foundation in order to bring it up to date in most cases. You may be able to make major changes in your rental unit kitchen with better lighting, backslashes, and painting which will cost less, but even those small upgrades are tax-deductible in a rental home.
Potential House Sale
If you are preparing your home for sale, it is possible you can deduct home improvements. The renovation must add value to your property in order to be deductible or it must extend the lifespan of your home. Kitchen remodels fall under the category of capital improvements. Keep in mind that experts state a kitchen remodel can give you a return on your investment of between 50 to 60 percent. For example, if you spend $60,000 for your remodeling project, you could see an increase in your home value between $30,000 and $40,000. Therefore, if you plan to sell your home soon and have been considering a kitchen remodel, you may not only improve the value of your home, but you may also be able to deduct a portion of the remodeling project from your taxes.
Energy Efficient Appliances
If your kitchen remodels included the installation of appliances that are more energy-efficient than what you had before, you could deduct the cost from your taxes. This could include things outside the kitchen such as tankless or solar water heaters. In most cases, in order to get the tax credit, you will need to install certain energy-efficient appliances although some states offer tax rebates on more appliances than others, Marble Concepts explains.
If one of the reasons you are remodeling your kitchen is due to a medical issue, such as needing wheelchair accessibility or other accommodations for an illness, it is likely deductible as well. If you lowered counters or made your kitchen larger to accommodate someone in your family who is disabled, that is considered medical equipment and it is tax-deductible. Other home improvements that may qualify as a deduction include the installation of ramps, widening doorways, installing support bars, moving electrical fixtures, and modifying fire alarms. Keep in mind that if the medical upgrades increase the value of your home, such as moving a kitchen that was on a second floor to the first floor or installing an elevator, you will need to deduct the amount of your tax break by the increased value of the home.
Documentation is Key
It is important to keep accurate financial records if you plan to deduct the renovation of any room in your home. When you file your taxes, you won’t be required to send in the documentation, but should you get audited, you will need to prove that the expenses you claimed were for the renovation and how it relates to your business or the value of your home. Before you decide to deduct any home improvements from your taxes, granite companies nearby say, you need to talk to an accountant to avoid any errors which could lead to penalties in the future.
If you are planning to remodel your kitchen, contact Marble Concepts today to see how we can help. With decades of experience, we will guide you through the process and help you get the kitchen of your dreams. Fill out the easy online form or give us a call at 215-396-7393.