Home remodeling can be financially overwhelming. You budget, save, shop for the best discounts. One financial opportunity that is often overlooked are the tax incentives that could reward you for your remodeling choices. We looked into the different options and have them all in one helpful resource right here for. Read on to learn more about the tax reliefs currently available on your home remodeling projects.
First: What exactly is tax relief?
Tax relief represents a government program or a policy initiative that has the aim of helping businesses and individuals by reducing the taxes that they have to pay. Tax relief can come in the form of a program for certain taxpaying groups or as a way to support a governmental initiative.
The Inflation Reduction Act of 2022 will make a historic down payment on deficit reduction to fight inflation, invest in domestic energy production and manufacturing, and reduce carbon emissions by roughly 40 percent by 2030. The bill will also finally allow Medicare to negotiate for prescription drug prices and extend the expanded Affordable Care Act program for three years, through 2025.
Are there really home improvements that are tax-deductible?
No, most home remodeling projects as a whole are not tax-deductible. However, if you installed energy efficient equipment in your home last year, including solar panels, solar water heaters, geothermal heat pumps, small wind turbines, or fuel cell property, you may be able to claim a tax credit on your tax return.
A tax credit is a dollar-for-dollar reduction of your tax bill. Some tax credits are refundable, meaning that if what you owe in federal taxes is less than your credit amount, you’ll receive the remainder as a refund.
What are the current opportunities for a tax credit?
According to EnergyStar.Gov the non-business energy property tax credits will be applied retroactively through 12/31/2022. From there updates will be applied for 2023 and remain effective through 12/31/2032.
Tax Credit: 10% of cost up to $500 or a specific amount from $50-$300.
Expires: December 31, 2022
Details: Must be placed in service in an existing home which is your principal residence by December 31, 2022. New construction and rentals do not apply.
Currently you can receive a tax credit within the following categories:
- Air Source Heat Pumps
- Central Air Conditioning (CAC)
- Gas, Propane, or Oil Hot Water Boiler
- Gas, Propane, or Oil Furnaces and Fans
- Water Heaters (non-solar)
- Advanced Main Air Circulating Fan
Qualified Energy Efficiency Improvements:
Please note: Tax credit DOES NOT INCLUDE INSTALLATION FOR THE FOLLOWING PRODUCTS.
- Roofs (Asphalt and Metal)
- Windows, Doors, and Skylights
Home Improvements with Medical and Dental Expenses in Mind:
Sometimes we are making home improvements in an effort to improve the lives of a loved one at home. There are tax incentive opportunities when updating your home with these remodeling needs in mind. Please refer to the IRS for the most up to date information on what currently does and does not qualify.