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Having home remodeling done, would like to understand any tax breaks

ideaiznfinite

I have a fairly large home remodeling project started in 2023 which is in its initial phase and going to last through part of 2024. Is there any part of the expense that I could get a tax break on?

FWIW the remodel would add extra sq footage along with additional rooms.

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Accepted answers

ideaiznfinite

https://community.freetaxusa.com/discussion/comment/1065#Comment_1065

Thanks, Kaybee. Another follow up, is the $10,000 deduction annual or one-time? Asking 'cause the project could span two calendar years.

KeriC

The $10,000 is an annual deduction limit, so if your remodel extends into two or even three tax years, you could deduct up to $10,000 each tax year. Please keep in mind that the sales tax deduction is taken if you itemize your deductions. If you take the standard deduction, there won't be any tax benefit from the sales tax paid.

It is also possible that you could qualify for home energy tax credits. You can find more information regarding these credits at: https://www.irs.gov/credits-deductions/home-energy-tax-credits

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[Deleted User]

If the remodeling being done is for a personal residence or main home, then none of the expenses can be deducted. When you sell your home is when the tax breaks would kick in since the costs of the improvements would be added to the basis of your home.

If the remodeling being done is for a rental property, then you would be able to report the addition/improvements on your Schedule E and depreciate the addition/improvements which would lower your rental income.

ideaiznfinite

The remodel is for personal residence. I heard from someone that the sales tax on the remodel costs is tax deductible immediately, is that incorrect? And if not, how significant of an impact that would make?

kbichadd

https://community.freetaxusa.com/discussion/comment/479#Comment_479

You can deduct up to $10,000 in sales tax or income taxes but not more than $10,000

ideaiznfinite

https://community.freetaxusa.com/discussion/comment/1065#Comment_1065

Thanks, Kaybee. Another follow up, is the $10,000 deduction annual or one-time? Asking 'cause the project could span two calendar years.

KeriC

It is also possible that you could qualify for home energy tax credits. You can find more information regarding these credits at: https://www.irs.gov/credits-deductions/home-energy-tax-credits