Improving your home can be one of the most rewarding processes…but also comes with a lot of hesitation.
A common concern amongst those improving their home is how much of a tax reduction they’ll receive in the process, as well as how to maximize their return. Although every jurisdiction is different for the type of tax laws they enable, there are some commonalities you can follow along with if you’re looking to improve your home. That’s why we decided to jot down a few of our favorite notes on home improvement projects, and what they mean to your tax liability.
Know The Local Laws For Historic Tax Credits
One of the biggest reasons why people make improvements to their house is tax credits.
A particularly lucrative option is historic tax credits, which are when people improve their historic/old homes to code of what the initial decor was. By following these rules, people can sometimes receive up to 50 percent back on improvement costs, depending on the locale. With historic tax credits, the federal government, states, and sometimes local agencies reimburse the tax amounts owed on improvements (as long as they’re approved by an agent). Check out what historic tax credits exist for your city, as these can be a significant money saver on your tax liability.
Embrace Modern Improvements Like Solar Panels
Beyond historic tax credits, there are a lot of improvements you can make to update a home while reducing your liability. In particular, one popular example is energy efficiency credits, such as putting a solar panel on a home. Not only will this help you save money on taxes as long as current tax credit incentives are in play, but through reducing your electricity bill as well. A pretty big win-win. Be sure to run your projected benefits against potential savings to see if this improvement makes sense.