considered taxable income. You can add the improvement cost to the value of your property to reduce the amount of this taxable income. This can help you save money in taxes following the sale. • Home office deduction. If you are self-employed and work from home, the amount of space in your home that’s dedicated towards business activities is tax deductible. This deduction will include loan interest, insurance payments, utilities, repairs, and more. However, with the TCJA going into effect for 2018 - 2025, people who are not filing as self-employed are ineligible for the deduction. There are other specific guidelines for taking advantage of this deduction, so check with your professional tax preparer before filing. • Home energy tax credits. The IRS continues to incentivize homeowners who invest in eco-friendly home improvements. Homeowners can claim the Energy Efficient Home Improvement Credit, which applies to upgrades like exterior doors, windows, insulation, and HVAC systems. From 2023 through 2032, this credit allows for 30% of the total improvement cost annually, up to a maximum of $1,200 each year. Additionally, the Residential Clean Energy Credit covers solar, wind, geothermal power, solar water heaters, fuel cells, and battery storage, offering a 30% credit with no annual or lifetime limit until 2032. These credits, available for primary residences and second homes but not for non- residential properties, provide strong incentives for investing in energy efficiency and renewable energy.
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