Many hardworking citizens don’t know enough about tax deductions. While we are not tax professionals, and this should not be taken as tax advice, we did some research, and here is what we found.
Tax deductions, along with tax credits, can significantly reduce taxable income and tax amount. A lot of activities are tax-deductible, from supplying classroom materials to winning the lottery. Many remodeling projects qualify for deductions. This includes solar panel installation and home office upgrades. Sadly, some people forget the tax deduction also applies to increasing home value.
When you decide to sell the home, every dollar you have spent on upgrading it and increasing its value will be subtracted from your tax return. To qualify for this deduction, you need to choose the right remodels, keep receipts, and adequately document the process.
If you want a larger tax deduction, aim for remodels with excellent ROI. For getting inspiration, read the list below and find out more about the three most profitable remodels:
According to experts, kitchen remodels will continue to have the highest ROI even in 2021. They have been one of the top remodeling projects for decades, enabling homeowners to cash out with a comfortable sum.
Some minor remodel ideas are:
- Cosmetic upgrades.
- Switching old appliances to energy-efficient ones, cabinet replacement, countertop replacement.
- Fixing up the floors.
- Window replacement.
A common mistake homeowners make is neglecting design and quality for the sake of cutting costs. The truth is, the less attention you put on quality during the remodel, the less you will increase your home’s value.
INCREASING SQUARE FOOTAGE
The price of your property depends on several factors, of which the most important one is square footage. The more rooms you have in your house, the higher its value will be when you decide to sell. That’s why house extensions are always on the top 3 list of remodels with high ROI.
Besides building from the ground up, you can also increase livable square footage by renovating neglected areas like basements and attics. Transforming your basement into an entertainment zone, guest room, or even a separate apartment for renting will drive up your home’s price in no time.
In this new time of COVID, home offices certainly increase home value and are tax-deductible. You can revamp an old unused space or build a home office from scratch. Whatever you decide, make sure you have proper documentation of the process.
According to statistics, remodeling an outdated bathroom will increase home value by an average of 12%. But if you have the opportunity, it’s better to build a second bathroom instead of investing in the old one.
Everybody loves a second bathroom. It’s very chic and convenient, especially if you frequently entertain guests. It not only increases usable space but according to research, it significantly boosts the chance of making a sale. A bathroom addition is perfect for home improvement tax deduction since it requires more significant financial investment but will also considerably increase your home’s value.
The main concern with bathroom additions is finding the right spot for building it. Popular options are wardrobe closets, under staircases, basement, and attics. But if you can’t find a suitable space, consider adding a second story or expanding your house.
If you are considering building a custom home or remodeling your current residential home, please contact us today to schedule a design center appointment to discuss your dreams and then help you make your dreams come true!