The good news is electrical services for home improvements and repairs may be tax deductible in certain circumstances. If your home is only used for personal use, then repairs are not tax deductible. However, there are still tax benefits for performing home improvements. If you do use part of your home for business, several tax benefits will be available.
The following is for discussion purposes only. IRS tax rules are revised regularly. Consult with a tax attorney or certified public accountant regarding deductions for home repairs and improvements.
The cost of improvements, like a remodeling of the master bedroom or adding a garage, may be added to the cost base price of your home. To illustrate, a house bought for $300,000 with $50,000 for improvements would increase its base price to $350,000. Selling the house for $400,000 would result in capital gains of $50,000, rather than $100,000 because of an offset for the improvements. In addition, there may also be an exemption from these gains in certain qualifying circumstances.
Using a portion of a home for business purposes allows homeowners to deduct all or part of the costs for home improvements and repairs. The amount will depend on the area that was improved and how it benefited the business. For example, if you get an electrical panel upgrade for a business office in your home, the expense is totally tax deductible if the improvement was solely intended for the business area.
If the electrical panel upgrade is intended as an improvement for the entire home, a percentage of the cost will be tax deductible. The amount will be determined by the square footage of the office in comparison to the entire home’s square footage. In certain circumstances, expenses for an improvement may be depreciated instead. Consult with a certified public accountant regarding this possibility.
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Providing professional electricians since 1988 in Maryland, Cook Electric is the company you can rely on for all your electrical service needs, including:
- Commercial & Residential Electrical Installations
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For knowledgeable, fair, honest, reliable, and conscientious service, call Cook Electric today at (410) 266-9040. We will be very glad to help you.