Tax season is approaching and you could be eligible for a tax break if you improved certain features of your home or opened credit lines for those improvements. Keep these in mind as you work on filing taxes.
Home repairs like replacing the roof, windows, gutters and doors, and the furnace or HVAC can qualify as capital improvements.
According to the IRS, you can take off interest you have on a home improvement loan up to $100,000. You can also possibly write off your paid interest on a home equity line of credit.
Energy Efficiency Increases
Home improvements and equipment included in the federal tax credit group according to EnergyStar.gov are:
- Air source heat pumps: $300 credit
- Central air-conditioning: $300 credit
- Gas, propane, or oil hot water boilers: $150 credit
- Gas, propane, or oil furnaces and fans: $150 credit for furnace, $50 for main air-circulating fan
- Insulation: Up to $500 or 10% of the cost, whichever is lower
- Roofs: 10% of the cost up to $500
- Non-solar water heaters: $300 credit
- Solar water heaters: 30% of equipment and installation costs with no cap
- Windows, doors, and skylights: 10% of the cost up to $200 for windows and skylights; up to $500 for doors
- Geothermal heat pumps: Up to 30% of equipment and installation costs
- Small residential wind turbines: 30% credit
- Residential fuel cells: 30% of the equipment and installation costs with no cap
- Biomass stoves: $300 credit for units with a thermal efficiency rating of 75% or more
You can also receive PACE or Property Assessed Clean Energy financing through HERO (home energy renovation opportunity) and if you buy a solar system that interest is likely deductible. PACE allows repayment of energy efficient and water saving home upgrades’ financing with your property tax bill. Flexible repayment terms are available for up to 25 years, with approval based on your history of debt repayment and home equity. PACE will finance the total price of your project, and interest on payments to HERO may be deductible. You may even be able to transfer remaining payments if you sell your home.
There are over 1 million products geared towards helping you save, from solar paneling to drought tolerant landscaping. Finance your loan by refinancing your mortgage, receive your loans through the Federal Housing Administration, or pay using credit cards. The result is that you can lessen home repair costs, be energy efficient, and receive tax deductions at the same time.