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Are home repairs tax deductible?

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If your home has suffered some kind of damage from weather events, an accident, or general wear and tear, as a tax-paying homeowner, you may well be wondering if home repairs are tax-deductible.

Like other tax-related questions, the answer is somewhat complex and includes both good news and bad news – here is what you need to know concerning home repairs and tax deductions.

You Can Deduct “Casualty Losses”

The large majority of home repairs are not tax-deductible. That said, there are some important exceptions and caveats to that statement. First, there is the casualty loss deduction for damage caused by natural disasters or sudden, unexpected weather events.

The IRS will only allow you to deduct that portion of the repair cost that is not covered under your homeowners insurance. If you don’t have home insurance, you can deduct it all. However, there are limitations too. You can’t deduct more than 10% of your adjusted gross income (minus an additional $100), and you can’t deduct more than the original cost of the damaged property plus any amount you put into improving it earlier.

In certain situations, you can get thousands of dollars in tax deductions from a single repair or multiple combined repairs under these rules. So be sure to look into this option and talk to an informed contractor or tax expert about getting your maximum home repair deduction.

You Can Deduct Home Improvements

If you add value to your home instead of just bring it back to its pre-damage state, that counts as a home improvement instead of a home repair. Thus, let’s say your windows or doors were damaged but you don’t qualify for a casualty losses deduction. If you install new windows or doors that upgrade your home’s energy efficiency – better ones than the originals, you could deduct all or a part of the cost as a home improvement.

The Home Office Deduction

Another way to deduct home repairs is if you have an office you use for business purposes in your home. If you take the home office deduction, then you can deduct expenses related to repairing that home office.

You can deduct all of the costs of repairs made directly to your home office and a percentage of HVAC and some other house-wide costs that also affect your home office space. The percentage of floor space your office takes up in your home is the percentage you can deduct in the latter cases.

The Rental Property Deduction

If you rent out a room or a portion of your property, then you can deduct repair costs related to the rental property. If the repair is simply to the rented-out portion of your property, then it is 100% tax-deductible.

If it is to a building-wide system (like roofing, heating, or AC) that impacts the rental property, then you deduct on a percentage of floor space basis just like for the home office deduction.

Long-term Ways Repairs Can Reduce Taxes

Finally, if you ever go to sell your home, you can subtract the total expense of all repairs and upgrades made to it from the capital gains to lower capital gains taxes.

For example, if you paid $100,000 for your home, put in $25,000 in repairs/upgrades, and sold your home later for $150,000 – your tax basis would be lowered from $50,000 to $25,000 because what you put into your home lowered your profit margin.

There are several ways that a home repair can reduce how much you pay in taxes. To learn more, contact Double J Siding & Windows in Amarillo, Texas, to talk to experienced contractors who are also familiar with these kinds of tax issues.

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Common Home Repair Mistakes To Avoid

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With home repair, many things are straightforward. If you’ve got a hole in the wall, you can buy a patch repair kit from Home Depot. It’ll usually be less than ten bucks. Certainly, mistakes can be made anywhere, but there are a lot of things you can do internally which won’t represent a big danger even if you do make a few mistakes.

That said, there are plenty of honest mistakes you can make in DIY. Below, we’ll briefly go over home repair mistakes that are common, as well as some truly considerable issues that develop from improper window repair. Areas where homeowners regularly make repair mistakes include:

  • Neglecting To Acquire Proper Permits
  • Improperly Gauging Supplies Need Before a Job Starts
  • Cheap Materials, Inaccuracy, Poor Job Preparation, and Ignoring Limits
  • Window Energy Conservation, Installation, and Price-Based Acquisition


Neglecting To Acquire Proper Permits

Oftentimes home repair or remodel is approached without proper permits. These can be more useful than you may realize; permits can tell you what exactly needs to be done in a repair job like, say, weatherproofing. If you’re putting in some new architectural home edition, to get permits you’ll need plans which include weatherproofing requisite to the edition, and local codes.

If you don’t look into the proper permits for DIY projects beforehand, you could have a time-release problem on your hands which doesn’t “blossom” until you’re getting your property appraised. Strangely, even “little” issues can keep you from getting proper appraisal or approval through official agencies. You definitely need to do your homework here, or you’ll do a bunch of home repair in vain.

 

Improperly Gauging Supplies Need Before a Job Starts

Something else that folks approaching home repair tend to get wrong involves material choice, and material supply. They say “measure twice, cut once”. However, even when you do that, mistakes will still be made.

You’re not looking for an exact amount of materials. You’re looking for enough to get the job done including a margin for error. Everyone makes mistakes, even tenured professionals. Your home repair efforts will be no different.

Cheap Materials, Inaccuracy, Poor Job Preparation, and Ignoring Limits

Something else you should be careful not to do when it comes to home repair is use cheap building materials. Certainly, you don’t have to buy the best possible supplies that are out there. However, if you go bottom-dollar, then you might as well not even repair whatever the issue is; it’s just going to break again, and your cheap repair will likely diminish property value over time. Whenever you approach a repair, it should better your property.

Also, there will be inaccuracies in many “amateur” home renovation efforts. You’ve got to measure properly to cut properly, but you don’t know what you don’t know. Sometimes secondary construction factors develop that you couldn’t anticipate except through experience. Poor job preparation leads to that, as does ignoring your personal limits. There are many things you can do, but some that are beyond you. You’ll just waste time and money if you don’t get help in such situations.

Window Energy Conservation, Installation, and Price-Based Acquisition

Perhaps the biggest home repair faux pas is installing windows yourself. As with building materials, buying cheap windows is a bad idea. Some are so brittle you can almost break them with your finger.

Such windows don’t conserve energy; they let it bleed out, and increase your utility bills over time such that what you’ve saved in acquisition is overcome in losses down the line. Installation must be done properly as well, and that’s not something easy. Unless you’ve done the job yourself before, it’s definitely advisable to seek help.

Maximizing Your DIY Effectiveness

To get the windows right, and generally acquire good consultation pertaining to certain other home repair needs, Double J Siding and Windows offers crystal clear solutions. Generally, inform your home renovation plans with advice or help from professionals who you trust, and you’ll avoid the majority of mistakes like this.