home improvement ideas to reduce your taxes

HOMEIMPROVEMENTIDEAS TOREDUCE YOURTAXES

MICHAEL MORROW

WWW .MICHAELMORROW .ORG

If you’ve recently remodeled your home then there’s a

chance you can save on your taxes. In some cases, it’s

possible to receive a tax credit for some renovations. If

you haven’t renovated your home but you’ve been

considering it, take a look at the below ideas.

BACKGROUND


Thanks to Solar Investment Tax Credits (ITC), you

may be able to lower your tax liability by a

significant amount.

According to the Solar Energy Industries Association

(SEIA), “the Investment Tax Credit (ITC) is currently

a 30 percent federal tax credit claimed against the

tax liability of residential (Section 25D) and

commercial and utility (Section 48) investors in solar

energy property” (Issues & Policies).

After you install solar panels on your home, you can

apply the ITC credit to your income taxes. This

benefit may be used for up to 20 years.

At the moment the tax credit is 30%; however, in

2020 it will drop to 26%. By 2023 the credit will only

be worth 10%, and it will permanently remain at that

amount. Therefore, right now is the best time to

install solar panels on your residence.

SOLAR


Installing a new door or new windows that are

energy-efficient are two simple ways to save on your

taxes.

Make sure that the products you purchase come

with the Energy Star label so that they qualify.

Also, the improvements need to be made in a home

you own—not a rental property.

SIMPLEADDITIONS


Electric heat pumps, electric water heaters, and air

conditioning systems are three upgrades that can

save you a significant amount of taxes.

Updating your roof and adding insulation are two

other projects that can save you a lot of taxes.

If you’re interested in installing a large system like a

wind turbine or geothermal heat pump, look into the

Residential Energy Efficient Property Credit. Just

like the ITC, this credit is worth 30%.

LARGERUPGRADES


If you recently purchased your home and want to

make renovations, you can take out a larger

mortgage to help pay for the renovations. The IRS

will let you deduct mortgage interest.

Home improvement loans are tax-deductible as

well.

However, it’s always a good idea to pay for

renovations without using any loan if possible.

While you can save some money on your taxes when

you use the appropriate loan, remember you’re

responsible for the loan’s interest.

OTHER IDEAS


home improvement ideas to reduce your taxes

Economy & Finance