Ask Questions before Claiming a Home Improvement Tax Deduction

A home improvement deduction may fall under any of several different topics, so it is important to explore the situations that are right for you. For example, if a mortgage has been refinanced to pay for a project, the owner of the home may qualify for a legitimate deduction. Likewise, deductions may be claimed if the home is being redesigned to make it handicapped accessible.

A home tax deduction for medical or handicapped purposes may create a substantial tax savings, but only a qualified professional can best counsel you regarding these situations. In addition, it may also be possible to claim a deduction if you are building or improving a home office inside, or attached to the main residence.

Victims of Hurricane Katrina may qualify for a special tax deduction but should consult the IRS regarding the Katrina Emergency Tax Relief Act. In brief, it increases the permitted qualified home improvement loans. Again, a tax specialist can help determine if these victims can claim a special home improvement tax deduction based on their individual situations.

Publications

There are a wide range of publications from the IRS that should be consulted, in whole or in part, before planning to claim a deduction. These include: Publication 936, Home Mortgage Interest Deductions; Publication 502, Medical and Dental Expenses, which will discuss accessibility-related situations of a home improvement tax deduction; Publication 530, Tax Information for First-Time Homeowners; and Publication 554, Older Americans' Tax Guide. All of these may address a deduction based on individual circumstances and your family financial consultant or accountant can help determine the rest.

It is possible that a deduction may fall within several areas on the same form, whether some of it is written off under a refinanced mortgage, handicapped accessibility, or flood damage. It is better not to figure these out yourself, unless you have advanced knowledge of the tax laws and/or are ready to be held personally accountable when a deduction is found to be inconsistent with current laws.

You may call the IRS with additional questions regarding a deduction at 1-800-829-1040 for live assistance, toll-free at 1-800-829-4933 for business assistance, and 1-800-829-4059 for TTD assistance.

Do not wait until the construction is over to determine whether you have a qualified home improvement tax deduction. Good record-keeping throughout the project will make it easier to decide whether your deduction is legitimate, or if additional information and/or authorization is required.

One Last Tip

To some people this might sound like a no-brainer but it's important and quite a few people think that it doesn't apply to them. If you're going to try and get a deduction for imporvements made on your home please be sure that it's valid. Don't try to get something out of the government by lying or stretching the truth about costs involved or anything else to do with the deduction. Sooner or later you'll be found out.

Article Source: http://www.ArticleStreet.com/

About the Author

Will King is the webmaster for Home Improvement DYI where you find many resources and other articles on just about everything related to home improvement.

Claiming A Home Improvement Tax Deduction

The approach of spring often encourages homeowners to start considering home improvements and repairs. However, before you start getting out the hammer and nails or hiring a contractor consider if your home improvements may be eligible for a home improvement tax deduction.

The first thing the homeowner must understand is the difference between a home improvement and a home repair. Simply put, a home repair is classified as fixing a problem. For example, repairing a hole in the roof, fixing a leak or repainting a room would be considered repairs. On the other hand, remodeling a kitchen, adding a couple of rooms, building a garage or installing a swimming pool would be classed as improvements. These improvements add to the living amenity of the home’s owners and usually add value to the home.

The Internal Revenue Service sets out strict guidelines on how a homeowner can claim a home improvement tax deduction. It is strongly recommended that before you hire a contractor or start any home improvement works that you obtain advice from you tax consultant or from the local office of the IRS

Tax deductions for home improvements can fall into any of several different categories. A medical condition that required providing disabled access to home would normally be classed as a home improvement.

There is a special home improvement tax deduction for victims of Hurricane Katrina. Consult with the IRS regarding the Katrina Emergency Tax Relief Act as it increases the permitted qualifying home improvement loans.

If you are planning a home improvement to an area of your home that is in need of repair you may be able to include the repair as an improvement. The Tax Act states that where a repair is carried out in the same area of the home that is being remodeled then the repair can be included as part of the improvement project. So, if you are planning on remodeling your kitchen don’t forget to take care of the leaking pipes at the same time and claim the entire project as a deduction.

Tax Credits vs Tax Deduction

Tax credits can also provide significant savings to the homeowner. Whilst a tax deduction for home improvement can reduce the amount of income on which tax ist payable, a tax credit directly reduces the tax itself. Tax credits are available for many types of home improvements. For example, installing insulation, adding energy-efficient windows, and some types of highly efficient equipment for cooling and heating, and solar water heating may all qualify for tax credits.

The IRS has many helpful publications to assist homeowners who are about to embark on home improvements so a visit to their website or calling into a branch office will usually provide the homeowner with a wealth of information.

And when you begin your home improvements remember to maintain accurate records of spending and save all receipts … this will assist you enormously when the time comes to claim your home improvement tax deduction.

By: Alison Stevens

About the Author:

Alison Stevens is an online author and maintains The Home Improvement Website to assist homeowners with tips and information about home improvements
Read more articles by: Alison Stevens
Article Source: www.iSnare.com
Permanent Link: http://www.isnare.com/?aid=125927&ca=Home+Management
Article published on February 15, 2007 at iSnare.com