5 Home Improvements That Could Help You Save During Tax Season
Home upgrades are expensive, but you could earn back some of that cash when tax season rolls around. Whether you made upgrades last year or are planning some for 2016, keep these expert suggestions in mind (and talk to your tax advisor for personalized advice).
Certain doors, windows, insulation, and roofing materials will net you a credit of 10 percent of their cost. You can also get back 100 percent of the cost of qualifying heat pumps, water heaters, central air conditioning systems, stoves that use biomass fuel, furnaces, and boilers. There are limits to the amounts you can earn, but purchases can date back to 2006 if you haven’t claimed them yet, says Ameeta Jain, cofounder of Homeselfe, a DIY home-energy audit app.
Have you added new insulation or swapped light bulbs? “If you have a home office, don’t forget that home repairs and improvements are factored into your home-office deduction calculation for the business use of your home,” says Lisa Greene-Lewis, a CPA and tax expert at TurboTax.
Bedroom sets, entertainment centers, and other home goods often come with a hefty price tag. Keep track of the sales tax you pay on big-ticket items—homeowners who itemize are allowed to deduct either sales tax or state income tax, whichever one gives the biggest tax refund, according to Green-Lewis.
Qualified solar, wind, geothermal, and fuel cell equipment will score you a tax credit of 30 percent of its cost. “That’s substantial and there’s no dollar limit, so if your credit totals more than what you owe in taxes, it will carry over to next year,” says Jain.