We have to do major home repairs, can we write this off our taxes?

Question

We have to replace the furnace, air conditioner, hot water heater AND the siding! It's a HUGE chunk of money that we really do not have. Can we write all or part of this off our taxes?

Answer 1

The short answer is No. You do have a number of options though, some that will help you now, and some that will help you when you sell your house.

First off, in the short term, you should be able to claim some tax credits (which is different then "writing off") for certain improvements made to existing homes after 12/31/05 and before 1/1/08.

"The following items are eligible:

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Insulation systems that reduce heat loss/gain
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Exterior windows (including skylights)
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Exterior doors
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Metal roofs (meeting applicable Energy Star requirements)."
- Per IR-2006-34 (linked below). To make sure you qualify, check with a tax professional BEFORE you do any work. I also believe there is a tax credit for putting in certain types of hot-water heaters and/or furnaces. Again, check with your local tax professional, as they should know more. Also, there most likely are additional state tax incentives that you might be able to qualify for, but I can't tell you anything about that because I don't know what state you live.

As for the long-term, any capital improvements made to your home, including a new furnance, roof, siding, etc (as long as intended to be permanent and you're taking it with you when you move) can be added to the basis of the home, thereby reducing any gains you have when you sell it (which can come into play if your neighborhood has gone or will go through a huge appreciation while you own the property).

As always, check with a tax professional for all of this, and it would definitely be worth your while to check with him/her. And don't forget to keep your receipts.

Answer 2

You can deduct the sales tax you paid on the home repair material under the sales tax deduction if you file a Sched. A (long form) and then the actual cost of the repairs gets added to the basis of your home so when you go to sell it you show less of a gain.

Answer 3

Check the IRS website since the rules change frequently. However, you may be able to offset some of your capital gains when you sell the house with a portion of what was spent improving the property.

Answer 4

Yes, you can. Check with your tax guy. Rebates are also available for energy efficient models too. Check with your local utilities company as well.

Answer 5

Only when you sell the house.

Answer 6

We did.... Our tax lady use to worked for the IRS, so she know where and how to do it.....