The safe harbor for small taxpayers (SHST) allows landlords to deduct all annual expenses for repairs, maintenance, and improvements. However, homeowners who renovated or did some upgrades last year may be able to save some money on their taxes this year, depending on the following:
Home repair projects like painting, roof repair, replacing worn carpeting, or patching the driveway cement are rarely tax-deductible. Exceptions may include damages caused by natural or man-made disasters.
Repairs that are part of an extensive renovation that permanently adds value to a home or extends its lifespan may be tax deductible. Routine repairs or maintenance to keep your home in good working condition are not deductible against your taxable income. Capital improvements, such as a new roof, are not tax-deductible.
Many home improvement projects don’t qualify for tax deductions, but some might qualify for a tax break or have other tax implications. Repairs can be tax deductible for a rental property when they are made to keep the rental property in good working condition and can be deducted during the tax period.
Some chimney repairs are covered by insurance, depending on the cause and extent of the damage. Home insurance deductibles are the portion of costs you’ll pay upfront for a covered claim. The IRS allows you to write off home repair costs only if you rent out part of your home or if you qualify for the home office tax deduction.
📹 Roof Insurance Money & How It Works: The Perfect Way To Explain It To Homeowners
This isn’t just for new roofing sales reps. Seasoned pros – you’ll learn a thing or two 🙂 In this video I teach you 3 things. #1 – How …
Which home improvements add the most value?
Remodeling and renovating your home can significantly increase its value, but not all renovations are created equal. Some projects can add significant value, while others may reduce the sale price. The kitchen is a prime example of a project that can pay off, as prospective homebuyers are looking for modern, updated kitchens. According to Remodeling Magazine’s annual Cost vs. Value Report, recouping 62. 7 to 81. 6 percent of your investment on a kitchen remodel is possible. However, it’s important not to go overboard, as adding an $80, 000 kitchen to a $125, 000 home isn’t a smart move.
Are foreign property taxes deductible in US?
The tax treatment of homes in the U. S. and foreign countries is similar, with the ability to deduct mortgage interest and points up to $750, 000 of secured mortgage debt. These deductions must be itemized on Schedule A when filing a tax return. The tax rules for rental income depend on the number of days the home is used for personal use. Foreign real property taxes were no longer deductible on U. S. tax returns in 2017. The benefits of foreign property ownership tax depend on how the property is used.
For example, if you live in the home, you can claim the mortgage interest deduction and deduct mortgage points. If you earn rental income, you can deduct “ordinary and necessary expenses for managing, conserving, and maintaining” the property.
Are home improvements tax deductible in California?
Medically necessary home renovations can be eligible for a medical expense deduction from the IRS. These renovations can be made to create a functional space for the individual, spouse, or dependent due to medical issues. Examples of medically necessary home improvements include installing entrance or exit ramps, widening doorways, modifying hallways and interior doorways, adding railings or support bars to bathrooms, lowering kitchen cabinets, moving electrical outlets and fixtures, installing porch lifts, modifying fire alarms and smoke detectors, altering stairways, installing handrails or grab bars, changing hardware on doors, and grading the property for access.
What is the most costly repair on a house?
The list of the 10 most expensive home repairs includes siding, storm damage, foundation, heating and cooling equipment, sewer line repair, roof repair, driveway repair, and termite damage, which can cost thousands of dollars to replace.
What is the most expensive part of a house renovation?
Kitchen remodels can be the most expensive part of a renovation due to the high cost of high-end appliances, custom cabinetry, and premium countertops. Extensive plumbing and electrical work is also required, especially in older homes where wiring and plumbing may need significant upgrades. Bathroom renovations also involve high-quality fixtures, tiling, and plumbing work, including moving or installing new pipes and fixtures. These expenses can escalate quickly, especially in older homes where wiring and plumbing may need significant upgrades to meet current standards.
Are home improvements tax-deductible in USA?
Home renovations are generally not eligible for federal tax deductions, but certain improvements can help reduce taxes. Financing home improvements through your mortgage can allow you to claim interest as a mortgage interest deduction. Medically necessary home improvements can be claimed as medical expenses if they are reasonable and do not add value to the home. Installing qualified energy-generating systems like solar panels may qualify you for a federal tax credit covering 30 of the installation cost. To minimize taxes, consider using home renovations and improvements at the time of purchase or after. Using your mortgage to make home improvements can help save on the costs of home renovation.
What is the standard deductible?
The 2024 standard deduction for tax returns filed in 2025 is $14, 600 for single filers, $29, 200 for joint filers, or $21, 900 for heads of household. The IRS offers two options for lowering taxable income: the standard deduction and itemized deductions. The standard deduction is a specific dollar amount that taxpayers can subtract from their adjusted gross income, reducing the amount subject to tax. The IRS adjusts the standard deduction amount annually to reflect inflation rates.
Standard deduction amounts depend on tax filing status, with certain taxpayers, such as those who are blind or age 65 or older, usually receiving a higher standard deduction. Dependents on someone else’s tax return may also receive a lower standard deduction.
What is the most expensive part of remodeling a house?
The kitchen, bathroom, basement, and other entertainment areas are the most expensive parts of a home remodel. These areas can transform a living space into a more functional and aesthetically pleasing environment, but they also require significant financial investment. Understanding which parts of a remodel are the most expensive can help homeowners plan and budget more effectively. Structural changes and repairs, particularly those involving the foundation, are one of the most costly aspects of a remodel. Repairing or reinforcing a foundation and removing or altering load-bearing walls requires professional expertise and can significantly increase costs.
What is the most expensive home improvement?
Home renovation projects can be costly, especially during the summer season when homeowners are more likely to take on new projects. The main factors to consider when choosing updates include price point and the suitability of the house to the homeowner’s lifestyle. According to Angi’s 2022 State of Home Spending report, homeowners are now prioritizing making their homes more useful and suitable to their lifestyle over return on investment.
This shift began in 2020 with the pandemic, and with higher interest rates and mortgages, homeowners are more willing to stay in their current residence and make more drastic changes rather than move. Therefore, it is crucial for homeowners to plan their renovations early to beat the rush and make the most of their investment.
Are property taxes deductible in the US?
Deducting property taxes on your main residence and other real estate can be done by itemizing your deductions. The total amount of deductible state and local income taxes, including property taxes, is limited to $10, 000 per year. Miscellaneous charges, such as service delivery fees or local benefit assessments, are not deductible. Maintenance and repair costs itemized in your bill can be deductible. Some states, cities, and counties assess property taxes on various types of property used to produce income, with each local district having its own list and determining the item’s taxable value.
Is home improvement a good investment?
Home renovations typically yield a 70-percent return on investment (ROI), enhancing the quality of life and increasing the value of a home. The most effective ROIs are those that add functional space and square footage, such as finishing basements, adding bedrooms/bathrooms, and new kitchens. Conversely, luxury upgrades, aesthetic-only improvements, or unconventional projects may not add value. ROI is the financial return or profitability resulting from a home improvement project, indicating the value or gain generated from the investment in improving or renovating a property.
However, most home improvements do not yield a 100% return on investment. HGTV shows like Fix it or Flip it may suggest that renovations are a profitable investment, but this is not the case for most home remodeling projects.
📹 Self Employment Tax Deductions to Take Advantage of in 2023!
Don’t overlook these important tax deductions for self employed and small business owners. Looking for more resources to help …
Wow! Thanks so much for this info. I believe it’s just what I needed. I’m a homeowner trying to get educated before I replace my 20 year old roof. I’ve wanted & needed to replace it but always procrastinated out of fear of getting “jacked” by a contractor in addition to me not understanding how the insurance part works. Your explanation in this article helps a great deal. Now, all I have to do is pick a roofing contractor that I can trust to do an honest job. Thanks so much!!
I’ve been roofing for about a month now and was starting to get discouraged with the progress I’m making (very little). I’ve been perusal your articles and this one in particular has made me that much more confident in talking to homeowners about the insurance process! Thank you for sharing this knowledge!
Adam thank you for this. I’m on my 7th week in roofing sales from 25 years as a fine dining server. My first 5 weeks sucked. The only deals I closed were 2 cars and a residential roof from friends and family. I had burned thru my savings driving up to an hour and a half from home casing hail reports with no success. I pawned my camera equipment for $400 to cover gas and bills. Ive watched a ton of your articles and have put them to work and tell everyone I work with to watch them.’ In the last 10 days I have closed 1 residential roof, 1 all steel 40′ x 40′ steel storage barn with 3 40′ x 12′ overhangs on a ranch 2 cars and in the process of closing a 120 room motel in Irving, Texas. From perusal you I have developed a 20 second pitch, a casual conversation pitch, a technical FOMO pitch and come backs for “I’m not interested”. This Wednesday I should be receiving a check for $6,300, more if I close the Motel and get my 10% of that first check. Another tool that has been life saving is CompanyCam which I use to make projects using GPS, photos inspections and input info which I combine and edit into a inspection report that I make into a glossy folder I present to the owner as a closing tool. I admit that it feels good being the new guy making heads turn. Thank you so much,
I started roofing sales 3 weeks ago, worked weekends until this week when I switched to full time. Ran into multiple people trying to get better deals, seems like they’re fishing for a covered deductible or some cash in their pocket. Good to have this knowledge to inform them that all they would pay is a deductible, and that any less is fraudulent. Thanks adam!
This is a great tool. I use this with one addition: I clarify the difference between a car claim and a roof claim. You can buy a similar used vehicle for the ACV, but you cannot purchase a used roof. Therefore the insurance company will pay to have your entire roof replaced, and release the depreciation to you upon completion of the project.
I got a question about recoverable depreciation. Lets use an example. Lets say a roof replacement cost is 10K with 50% recoverable depreciation and a 1K deductible. The insurance initial disbursement is 4K. But I find a roofer who can do the job for 9K. So I give him 4K. He completes the job. Do I have to give my deductible of 1k to roofer even though the recoverable depreciation check of 5K can cover the remaining balance? Or will insurance not cut a check until they see I paid roofer my deductible and then just cut me a 4k check?
This is by far the best and easiest article to follow about understanding how insurance money works. The vehicle analogy was great to include and compare to the roofing side of things. I’m new to the roofing industry with a lot of sales experience, and I have already ran into how understanding and translating this to the homeowners is so crucial. I signed 5 deals my first two days, and this knowledge has made the difference because it cleared up any future miscommunications about what get pays by the insurance, how it gets paid, and what the homeowner has already agreed to pay through their contractual agreement for the fixed price (Their deductible). Other contractors that say they will eat up the homeowners deductible sounds nice to the homeowner until you explain the real process. Like you said in a different article, overcome talk about the deductible by switching it from “I have to pay my deductible?!” To “that’s all I have to pay?” And that only comes with being knowledgeable as their contractor and advocate in this process, and translating that information clearly to the homeowner. Thanks again for the article. Been eating these articles up day and night!
What happens if the homeowner does the repairs themselves? They get the initial payment then they buy the materials and do the work. The work gets signed off by the inspectors. Does the homeowner then submit the proof and invoice to the insurance company and receive the additional money from the insurance company. There are some people in the trades who can do their own repairs as owner/builders.
Thank you for this article. I have a question, you mentioned the insurance will release the depreciation. For instance you said the insurance will release up to the cost to replace the roof and not a dollar more; but what if the cost to fix the roof exceeds the RCV? Will the insurance provide the customer the full amount? As you know, materials and labor costs increase over time.
This all makes total sense.. but I do have a question. What if I submitted an insurance claim on a roof that is only a few years old and I receive a check only a few thousand short from RCV? If a roofing company bids the job cheaper than the check I received from insurance then what? If I submit a receipt after the roof gets replaced and it is cheaper then the check they sent me do I pocket the money in that case? That doesn’t seem like fraud to me.
Thank you ! ! I have two jobs upcoming but the homeowner wants me deal with the insurance….. I had no idea what or how would be able to do so…. this article helped me a lot ! Thanks man ! Also is there additional cost for you doing all the paper work and talking to the insurance or how would I go about calculating the total amount for this + the total cost of the roof !
I lost a job to a large national company with poor reviews because they gave the homeowner the option to use the ACV from all items to do the roof and a few other little projects. They were going to forfeit the depreciation since it was small (2 year old roof). Hopefully they will do the low slope area right with code. I could have offered them this same deal but I don’t think it is wise to go right to this option.
Adam, try to provide a SERVICE to your potential customers. Your message of psyching out the customers may put money into your pocket; but, it doesn’t serve the insured, nor, the roofing companies which are, actually, doing the repairs. You, and those who follow your example, are hurting the roofing industry.
I know this is an old article, but what are your thoughts on homeowners using some of the ACV value of fence, window screens, etc. to pay their deductible? I’ve been talking to my customers about that option when they don’t want to pay their deductible out of pocket. I don’t mind excluding those other line items from my scope of work, but it seems like a fine line. Especially when it is brought up after I’ve already submitted an estimate to the insurance company that includes ALL the damage that I found during my inspection.
Someone riddle me this: why does it matter about insurance? The insurance company sends someone out to eval the roof. They determine how much they will pay. Now I can use someone they suggest or I can go find a roofer. I can use the receipt from the roofer as the invoice. The problem is home owners know it doesn’t cost 20k to replace a roof. Why should the roofer pocket 10-15k? Thats why you have these Russian roofing crews running around. Cause it’s so lucrative.
Hey Adam, first off thank you so much for all the invaluable gems you are consistently dropping on youtube, your work is greatly appreciated, I can’t wait to purchase your battle pack for my crew for next year. Just had a quick question regarding this example: i know you said the homeowner has to pay the deductible of $1000 however in this case the roof job was $18000, and the homeowner has received the 1st payment of $10 000 – deductible = $9000, and the depreciated amount is of equal value $9000 after the deductible. Why does the homeowner only get $7000 after completing the job and sending invoice? doesn’t that mean they have paid the deductible 4times at this point???
Is this a scam? The same thing happened to my wife’s mom. They came to the door and said this appraisal company would be able to do a claim to repair the roof repair with insurance to get the repair for free. Then they filed a claim but never actually repaired the roof. When the check came for $600 they wanted $2000 instead of 30% on the claim. This is a scam to prey on elderly and I will be contacting a lawyer. They had her sign some paper, who even knows what these people are doing. This is some kind of scam that is being pulled?
Thank you so much for posting these great articles, they are very encouraging. I haven’t taken a single tax deduction yet, however I think it was mentioned before that you can still take business startup cost deductions up to 5 years after the fact? Also if I already own a piece of equipment, but now I use it specifically for my business, is there any way to claim that as an expense or do I have to “Sell” the equipment to my business? And finally (I swear its my last one), I’m still slowly increasing business, my “profits” are miniscule and haven’t exceeded 3 digits. Can I actually end up getting more in tax deductions from my costs than I make in actual profit every year?