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Itemized Deductions Schedule-A


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Old 08-21-2012, 01:29 PM
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Itemized Deductions

If you renovate your house by changing the carpet or purchasing a new equipment like a refrigerator or a Gas, could you deduct it on your tax return.

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Old 08-22-2012, 10:34 AM
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“If you renovate your house by changing the carpet or purchasing a new equipment like a refrigerator or a Gas, could you deduct it on your tax return.”------>In general, home renovation/improvement expenses are not deductible on your tax return in the year they are incurred; home remodeling/renocvation(improvements) costs , capital expenditures, are NOT subject to tax deduction on your tax return in the year they are incurred. Home renovation costs are usually added to the taxpayer's basis in the home which will reduce the taxes owed on the sale of the home by increasing the adjusted basis of the home(though capitalization). When you sell your home, the increased adj. basis decreases your long termcapital gain and your tax liability.BUT expenses you have for home improvements as a result of a disaster are deductible expenses. The Katrina Emergency Tax Relief Act granted a tax relief for those people who needed to rebuild their houses due to natural disasters. Since then, expenses to fix damages caused by natural disaster are considered tax deductible. This includes the expenses you might have in paying back a loan you have that helped you pay for the home improvements you made due to natural disasters.However, there are some expenses related to home improvements that you may deduct. You can deduct the interest you pay on a loan to renovate/improve your home, subject to the same limits as mortgage interest on Sch A of 1040. Interest for debt incurred up to 2 years before the completion of a major home improvement project or up to 90 days afterwards may be deducted in the year it was paid. You can deduct the sales tax you paid on building materials used for a major home improvement in the year you paid it on Sch A line 5. ALSO, if you renovate/remodel your home for medical reasons, such as a wheelchair ramp for a disabled person, you can include the cost as part of your medical expenses deduction that exceeds 7.5% of AGI. In the casae of energy saving home renovations to your home, The IRS provides you with tax credits.



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