Serapion

It just so happens that I have a phenomenal tax preparer. He makes absolutely sure that any and all home improvements that we make are utilized as deductions. One year we completely gutted the entire basement and redid it. That was tax deductible. The next year we had all of the chimneys lined and stucco with custom designs installed on the out sides. That was tax deductible.

Different Year, Different Offer

Apparently the American government is seemingly never happy with the tax forms they have created, it seems they change every year. The tax credit from the government for home improvements in the 2010 and 2009 year are different than tax credits being offered for home improvement this year. The credits that were available for the last two years for making your home more energy conservation friendly, do not apply this year; they have been altered. Tax credits are available this year for electric vehicles or recently manufactured plug in hybrids.

What’s the Difference Between a Tax Credit and a Tax Deduction?

A tax credit: You know how when you buy a certain item at the store you can sometimes receive a cash rebate. A tax credit is something like that but it’s not immediate. It is added to your tax refund. It increases the amount of money that you will get back from the Government and is more often than not more valuable than a tax deduction. A tax deduction: these simply lower the amount of taxes that you’ll have to pay a by lowering your income. Only a percentage of what you pay for improvements will be applied however; unlike tax credits which return your investment dollar for dollar.

Building an addition on your home should be considered a home improvement. Each state has their own specific rulings on home improvement vs. tax deductions/credits though, so be sure to check with an accountant or tax service. Get a planning applications in my area or your hard work might not be deductible.

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