Taxes can be very confusing, especially with all the myths and misconceptions flying around this time of year. DreamMaker Bath & Kitchen of Central Texas, one of the top remodeling contractors in our area, discusses some tax myths you should know about.
1. You Can Deduct All Home Improvements
In general, home renovations are not tax-deductible unless the residence is also a rental property. However, there are exceptions. You can claim deductions for modifications that you make for medical purposes as long as they don’t increase your property value. Examples of this include installing support bars or railings, adding stair lifts, etc. You just need a letter from your doctor to prove that these modifications are medically necessary. The modifications must also exceed 7.5% of your adjusted gross income.
You can also deduct home improvements if you made them in order to sell your home. You can deduct those expenses as selling costs. However, the home improvements must be done within 90 days of closing.
2. Property Tax Deductions Are Gone
Under the new tax plan, most taxpayers can still deduct state, city and property taxes. However, there is a cap of $10,000 per year. When filing, one thing you need to consider is that the standard deduction has nearly doubled to $24,000 for married couples filing jointly and $12,000 for single filers. As always, we recommend consulting with a tax professional to determine how you’ll file your taxes and to determine whether you should take the itemized or standard deduction.
3. All Home Equity Interest Is Deductible
Many homeowners used to turn to a home equity loan or line of credit for cash to make home renovations. In past years, the interest on these loans was tax-deductible. Now, HELOC interest is deductible only if the loan was used for a substantial home improvement. You should also keep in mind that your total deductible mortgage and eligible home equity debt must be less than the $750,000 cap.
DreamMaker Bath & Kitchen of Central Texas can help you with all of your interior remodeling needs. We are known for our ethical excellence and superior craftsmanship, and we provide a wide range of services including full-service remodeling, design and installation, and more. Our Code of Values™ is central to the way we conduct ourselves in business and in life. Call us at (254) 262-0087 to learn more about our services and products or to schedule a consultation.
