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Home Improvement Tax Deductions for 2015, 2016

Whether you already own a home or plan on buying one you can take advantage of valuable tax deductions when it comes to making home improvements. Second homes and rentals also qualify for certain tax credits and deductions.

Home Improvement Tax DeductionDo you have plans to purchase a home? If you do this would be a great time to take advantage of a tax saving measure with double benefits. You can add a little extra money into the amount of your new mortgage for a home improvement project

To claim your home improvement tax deductions you will have to itemize your deductions, and attach a Schedule A to your 1040 tax form to tally up your deductions.

Tax Credits for Energy Efficient Home Improvements Expires December 31, 2016

  • 30% of costs with no upper limit
  • Existing Homes, New Construction, Principal Residence, and Second Homes
  • Does not apply to rental homes
  • Geothermal Heat Pumps
  • Small Wind Turbines (Residential)
  • Solar Energy Systems

Residential Fuel Cells and Microturbine System Expires December 31, 2016

  • 30% of costs up to $500 per .5 kW of power capacity
  • Existing Homes, and New Construction
  • Does not apply to rentals, or second homes

Medical Expenses Home Improvement Tax Deduction

If you have renovated your home due to a medical purpose you may be entitled to claim medical home improvements as a tax deduction. According to the IRS “Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body.”

IRS Publication 502 clearly explains the requirements of claiming medical and dental expenses. You can deduct on Schedule A (Form 1040) only the amount of your medical and dental expenses that is more than 7.5% of your adjusted gross income. The home renovations must be medically necessary to qualify for tax deductions. You will find an extensive list for qualifying home improvements under the capital expenses section of Publication 502.

Medical Home Improvements

  • Making a residence wheelchair accessible
  • Installing Ramps
  • Lowering Cabinets
  • Modifying Bathrooms
  • Widening Doors and Hallways
  • Adding Handrails
  • Modifying stairways and many more…

Home Repairs

A home repair typically does not qualify for a tax deduction. A home repair would include regular maintenance jobs such as, new paint, or general upkeep of your home.

Tax Software Guides to Claiming Tax Deductions

If you need help when it comes to claiming home improvements as tax deductions you can get all the guidance you need from the tax experts at TurboTax. Tax software takes the guess work out of wondering which items are deductible. You can try TurboTax for free.