With taxes still on your mind, it’s never too early to consider how to lower your tax bill for next year. If you’ve got plans to renovate your home or even buy a home that you intend to make improvements to, you could have tax deductions or credits in your future!
Large energy investments in your home, such as solar electric systems, solar water heaters, wind turbines, or geothermal heat pumps, can provide you with a residential energy efficient property credit, according to realtor.com.
You don’t have to drop a ton of money on energy efficiency updates to see it reflected on your taxes. Return on investing in small energy additions, like trading an old door or window for energy efficient ones, can be seen come tax time – though any changes made in the name of energy efficiency must be Energy Star-rated to count, says Realtor.com, and accumulate to no more than $500 per year.
Making changes to your house to accommodate a disability in your family can be deducted from your income, depending on the condition and which improvements you make, says Realtor.com. These types of improvements include installing a wheelchair ramp and widening doorways, among other things – but be sure to check with your doctor and tax accountant to ensure the upgrades are medically necessary.
If you’re buying a house you intend to make changes to, Realtor.com advises of this trick: immediately after you buy, go ahead and make renovations and take out a larger mortgage to cover the cost, because your mortgage interest is deductible! If you’re already a homeowner, you can do the same through a home equity line of credit that are also tax deductible.
Source: http://www.realtor.com/advice/home-improvement/home-improvements-that-can-lower-your-tax-bill/