Major home improvements have significant costs so loans can be very helpful. Under the law, you can get tax deductions from the interest of your home improvement loan given you meet the criteria set by the Internal Revenue Service (IRS)
In this post, your residential roofing contractor, Jack the Roofer, discusses the criteria for a tax deductible home improvement, such as a roof replacement.
Qualifications for Home Improvement Tax Deductions
The first thing that the IRS requires is that you own the property and have it as your permanent residence. The loan should also be under your name and is secured by the property you’re improving.
You’re automatically ineligible for a tax deduction if you don’t meet the first criteria, unless you’re using a home equity loan or a home equity line of credit, and you were able to prove that you used the funds for your home upgrades.
The next condition is that your home improvement must substantially improve your home and increase its value. Asphalt shingle installation or entire roof replacement is one of the most common qualified home improvements.
Other home upgrades that qualify the IRS requirement include adding a room, HVAC installation, installing new siding, home insulation and building a deck, porch, patio or swimming pool.
Repairs and routine maintenance are not eligible for tax deductions. It’s important to consult a CPA first before considering a home improvement loan to ensure the eligibility of your property.
What Records Should You Keep?
You need to keep a record of your receipts and transactions to help you prove your eligibility for a tax deduction on home improvement loans. Make sure to keep original copies of the loan contract, escrow closing statements, construction service receipts and form 1098 or the mortgage interest statement from the lender.
Choose Jack the Roofer, your local roofing contractor, when it’s time to improve your home. We provide quality roof repairs and installations. Call us at (720) 230-4484, or fill out our online form. We work with homeowners in Parker, CO.