So you have decided to renovate your home, and it may cost you a fair bit. Taking out a loan for home additions can be the best possible option when you don’t have the money saved up. However, come tax season, are you entitled to any tax deduction? In the new Tax Code, the answer is yes as long as you meet these two conditions:
Your primary residence must secure your home improvement loan. This means that you have to own the home and reside in it. You must also be the borrower on the home improvement loan, and it should be secured by the property that you’re improving.
The loan proceeds must be used to “substantially improve” the property that’s securing the loan. According to the new tax law, you must prove and show that you actually spent the proceeds on home improvement before any tax deductions can be made.
As additional information, here are some common home improvement projects that are eligible for a tax deduction:
*Adding a room
*Replacing the entire roof
*Installing central air conditioning or heating system
*Paving the driveway
*Completely rewiring the home
* Renovating the kitchen or bathroom
*Adding new siding
*Insulating the home
*Adding a deck, porch, or patio
*Building a swimming pool
When your home improvement project qualifies, you can now take the steps to claim your deduction. Now, you must seriously consider hiring a CPA to better advise you on your qualifications and the amount of interest that you can deduct from your taxes.
To make the process of claiming tax deductions easier, you should always keep records of your home improvement transactions. These records or receipts will serve as proof of eligibility. The following are some of the records that should be saved:
The loan contract
Escrow closing statements
Receipts for work done on the home
DuPaul construction is an industry leader and a premier home improvement firm. We are not just a kitchen contractor, but also a one-stop shop for any of your remodeling needs. Call us now at (304)759-8543 and schedule a consultation with our professional sales team. Get your project started as soon as possible. We serve residents of Martinsburg, WV.