Are Loans For Home Renovation Still Deductible From Taxes?

For tax years beginning in 2018 through 2025, you cannot deduct interest from a home loan secured by your home if the loan proceeds weren’t used to buy, build, or substantially improve your home. Home improvement loans are generally not tax-deductible, but there are exceptions. Your upgrade may be tax-deductible if it meets the Internal Revenue Service (IRS) criteria for capital improvements.

The IRS allows you to deduct the full amount of points in the year paid on your home improvement loan, provided you meet six criteria: your home improvement loan must add value to the home or increase its usable area. Home improvement loans generally aren’t eligible for federal tax deductions, even when used for eligible renovations or property improvements. Some home improvements are tax-deductible, such as capital improvements, energy efficiency improvements, and improvements related to medical care.

Importantly, not all home improvements are tax-deductible, and those that do must meet specific IRS criteria, such as medically necessary repairs. Home repair expenses are generally considered routine maintenance and are not deductible on your federal income tax return.

Some home improvements are tax-deductible, such as capital improvements, energy efficiency improvements, and improvements related to medical care. The IRS allows you to deduct the full amount of points in the year paid on your home improvement loan, provided you meet six criteria. Interest payable on loans taken for home improvement can be tax-deductible up to Rs.30,000 per annum.