The first thing you need to know is the difference between a
home repair and a home improvement. An easy way to understand it is that a home
repair falls in the category of problem resolution. Fixing a hole in your roof,
repairing a leak or painting a room are repairs. However, redoing your kitchen,
adding a room or building a garage, or putting in a swimming pool, falls into
the category of home improvements, which add value to the home.
Strict guidelines set forth by the Internal Revenue Service
will explain how to claim a home improvement tax deduction. Before you start
any home improvement project, you are strongly advised to read these
guidelines, and get some guidance from the local IRS or a tax consultant. There
are several different groups that tax deductions can belong. Even a medical
condition can be the cause of a home improvement tax deduction if things need
to be permanently changed in the home to accommodate this condition.
Following Hurricane Katrina, a special tax deduction was
implemented for the victims of that storm. Talk with the IRS to find out more
about the Katrina Emergency Tax Relief Act. It adds to the allowed qualifying
home improvement loans.
If there are areas of your home that need repairs but youre
planning improvements there as well, you may be able to claim the repair as an
improvement. According to the Tax Act, a repair that occurs in the same part of
the house being remodeled can be included as part of the home improvement
Homeowners can also take advantage of tax credits to save
money. Where a tax deduction for improvements can decrease the income that the
tax is payable, a tax credit decreases the tax itself. Tax credits can be had
for various home improvements. You can find out more about these ways to save
money through the numerous IRS publications available for your use.