Wanna know how to get a tax break on home improvements?
Homeowners today are weary to put money into their own homes, but did you know that home improvements can create tax breaks in the future? This tax break is not short term, instead the added value from improvements make to your home allow for future tax benefits.
Here is an example from inman.com: Joe and Jane purchased their home in 1990 for $250,000 and it is now worth $1 million, they will have a $750,000 gain. A full $500,000 of this amount is tax-free because Joe and Jane are a married couple and qualify for the tax exclusion. BUT there is still $250,000 subject to taxation. However, if Joe and Jane had spent $250,000 adding improvements to their home, they would have NO taxable gain. This is because the $250,000 is added to the home’s original value, which was $250,000.
To sum it up, if you add value to your home from improvements you will be able to deduct that added value from the gain-on-sale when you sell your home. So do not be afraid to re-model that kitchen this summer, in the long-run it will pay for itself.