If a home improvement project is tax deductible, remodeling a kitchen could cut down on the amount of tax you need to pay. Although savings are always welcome, you need to be aware of the guidelines laid down by the IRS regarding this. Knowing these guidelines could save you a lot of problems later on.
Remodel and Repair
Repairs to a home are not tax deductible. This is firmly enshrined in US tax law. If you have to fix a broken floor, for example, you can’t claim for it. However, if fixing the floor is part of a larger plan for remodeling the kitchen, you probably can claim it as a tax deduction.
Remodel
Remodeling the kitchen is classed as a home improvement as it adds value to the home itself as well as improving the living amenities of people living in the house. There are a number of different categories of home improvement that can claim tax deductions.
If it’s for medical reasons, such as giving disabled access to the kitchen, then under most circumstances this would qualify as a home improvement. If you need to undertake any repair projects in the kitchen, fold it into the remodeling work as it can help you claim everything as a tax deduction.
IRS
Because of the complexity of the regulations in place, it can be difficult to know exactly what qualifies as a tax deductible home improvement when you’re remodeling a kitchen. You need clarification before you start the project. If you’re using a contractor, talk to them as they might be able to advise you. Bear in mind, however, that contractors aren’t tax experts. Your accountant should also have the answers. Alternatively, talk to your local IRS office who will be able to offer definitive answers.
The IRS also produces brochures to offer advice to people who are remodeling a kitchen (or other parts of the house) and will gladly supply you with them. Always bear in mind, however, that remodeling needs to be a home improvement and not a home repair.
Tax Credits
Many types of home improvement, which can include kitchen remodeling in some circumstances, can qualify for tax credits. It’s important to understand the difference between a tax deduction and a tax credit. A tax deduction comes off of income so you pay less tax. A tax credit comes directly off the amount of tax owed so it can actually mean you pay less in tax than with a tax deduction. If you’re adding double pane windows or better heating and cooling equipment, these items qualify for tax credits.
Keeping Records
If you’re planning on claiming a tax deduction when remodelling a kitchen, make sure you keep all the receipts together with notes on what each one is for. This way, if the IRS questions you on the project, you’ll be able to produce complete documentation to back up your claim.
Read more: http://www.doityourself.com/stry/is-remodeling-a-kitchen-tax-deductible#ixzz0nFfQVIha
No comments:
Post a Comment