Traverse City, MI -- (ReleaseWire) -- 02/24/2014 -- Professional contractors who build houses or office buildings would often get confused about the home improvement expenses the IRS allows as deductible, so it’s no surprise Joe Taxpayer is often left scratching his head in bewilderment.
Traverse City tax specialist Frank Ellis recommends that anyone planning to include home improvement deductions in their 2014 tax return should start their homework now. If people wait until the last minute to prepare their return themselves, they could end up in a maze of trouble.
Ellis says areas where people may be allowed deductions include:
- Personal home improvement. IRS classifies all expenses related to maintenance and repair of personal property under personal, not business, expenditures. People, who use part of their home for business, may be able to get a home office deduction. Tax breaks usually apply to homes only when owners are ready to sell it.
- Adjustable tax basis and taxable gains. The difference between the sale price of one’s property and the tax basis is the sum of all investments made by them on home improvement and related expenses.
- Home repairs. Keeping the home in proper shape by preventing deterioration, retaining functionality and paying for maintenance is classified as repairs which can fall into the category of daily business expenses. The most common repairs in this category are carpet and drape cleaning, maintaining vents and air ducts, fixing broken glass, and other repairs that restore the original functionality of their property.
- Home renovation. They usually aim at improving the home’s function beyond its original purpose and should affect the resale value of ones house. They spread over the life of the property and fall into the process called depreciation and amortization.
- Energy home improvements. Energy tax credits can apply to existing homes, new construction and second homes, but not rental homes.
Obviously, many headaches can result from the time-consuming process of researching home improvement tax deductions. Frank Ellis suggests avoiding them by using online software such as TurboTax. TurboTax will scan ones return many times before filing to be sure one does not miss any valuable tax credits or deductions.
About Frank Ellis
Frank Ellis is a published author who has been writing tax and finance related articles for eight years and has written more than 700 articles for internet publications. He can be reached by phone 231-922-0938 or email firstname.lastname@example.org. His website is www.easyincometaxfilingonline.com.