Home Improvement Tax Deductions

Tax Deductible Home Improvements

If you have wandered into the land of home improvement projects, you’re in for some good news. Did you know home improvements are tax deductible? The trick is to know which improvements for the home are tax deductible and which ones are not.

Okay here we go. The criteria for qualifying as a home improvement is to “Substantially Improve Your Home.”

For Example:

• If it adds to the value of your home
• Prolongs your home’s useful life.
• Adapts your home to new uses

These improvements do not qualify:

• A simple repaint job. (unless part of a renovation that ”substantially improves “ your home)
• Repairs that maintain your home in good repair.

I think you get the idea now. If you happened to take out a loan and it wasn’t used to buy, build, or substantially improve your home, then it may qualify as a home equity debt. That’s a whole different topic and doesn’t fall into the improvement category.

Medical Expenses

Home improvements made to your home because of a medical necessity are tax deductible. You must keep in mind the fact that your deductions will have to exceed your earnings by 7.5%. Some of us know how quickly home improvements can add up especially for serious medical situations. The tax deductions can be a bit of good news during a difficult time in your life.

Here are some qualifying tax deductible home improvements:

• Wheel chair ramps
• Bathroom railings
• Elevators
• Lowering light switches

Energy Efficiency:

• Energy efficient windows
• Improved insulation
• Solar powered water heater

Learn More about Tax Deductions

I’ve given you some ideas on how you can improve your home and deduct the expenses from your income tax return. Learn more about tax deductions for home improvements.

If you would like to learn even more, then I suggest you visit TurboTax Online for a comprehensive list of all of the deductions you can take advantage of. The Tax Experts at TurboTax Online will scour your tax return for over 350 deductions. Don’t miss a single one!

Avoiding Federal Inheritance Tax

The easiest way to avoid inheritance tax is to give your cash and assets away while you are still alive.

You can make these gifts and donations to family members, charities, and political parties. You can gift money to your children for their wedding, tax free, as well as to your spouse. There are limits on the amounts each year. If you leave all of your assets to your spouse in the event of your death you can avoid federal inheritance tax completely.

Important to Remember

If you have left your estate to your spouse, your children will be responsible for paying the federal inheritance tax upon their death so planning is recommended. The gifts cannot adversely affect your normal standard of living and must be made out of regular income.

Planning

When planning on reducing your estate you must be careful with how much you give. It is important to give small amounts to a large number of people. You may also give large gifts as wedding presents to your children and making donations to charitable organizations. A will is important to have to make sure all of your assets are divided up properly so that one person does not end up paying taxes on all of your assets.

If you plan on leaving any stocks to your children or spouse, then you will need to have an inheritance tax waiver. This waiver will transfer these stocks and they can avoid paying the inheritance tax on them. Whoever receives the stocks will be responsible for the federal inheritance tax on them.

Executor

If you are not the beneficiary and only the executor of the estate then you will be required to file the taxpayer’s final tax return. The return will need to be filed on the same form as if the individual were still alive. Once you enter the taxpayer’s name then you will write “deceased” next to the name. This return will need to be filed before April 15th of the following year. If the taxpayer was married then the widow or widower will be able to file joint return for the year of the death.

Deductions

You are able to deduct all of the deductible expenses that were paid before death. All medical bills can be deducted that were incurred one year after the taxpayer’s death. You are still able to claim the standard deduction or itemize regardless of the time during the year that the taxpayer died.

For more information on inheritance tax guidelines please visit TurboTax Online.  TurboTax online offers free information and free tax calculators.