Homeowners can potentially qualify for an Energy Efficiency Home Improvement Credit of up to $3,200 for energy-efficient improvements made after Jan. 1, 2023. The credit for 2024 is 30% of qualified expenses, but it has certain limits depending on the type of improvement.
Clean Energy Upgrades
Homeowners could potentially qualify for the Residential Clean Energy Credit if they install new renewable energy properties in their homes. There is no dollar limit for this credit except for fuel cell properties ($500 for each half-kilowatt of capacity).
Historic Home Upgrades
The Federal Historic Rehabilitation Tax Credit could apply if homeowners are undergoing a renovation of a historic home. Historic homes can qualify for this tax credit and other grants since many organizations wish to preserve historical buildings. Taking advantage of these can help lower the financial burden of potential repairs while helping to restore a home’s original beauty.
Medically Necessary Upgrades
Homeowners could potentially include medically necessary home upgrades as a part of a medical expense deduction. These include improvements that help make a home more accommodating for a person with a disability, spouse or dependents that live in the home. The amount that can be included in a medical expense deduction depends on how the improvement impacts the home’s value.
Home Office Repairs and Improvements
Homeowners may be eligible to deduct home office repair expenses if they have a dedicated part of their home that they regularly use as their main place of business. The amount that can be deducted depends on whether the project impacts the entire home or just the office. Home office improvements are not tax deductible and would be categorized similarly to capital improvements.
Rental Property Repairs
If homeowners rent out a part of their home, they may be able to deduct repair expenses from the amount of taxable rental income they receive. Limitations apply, such as if they’re renting a space in their current residence.
Capital Improvements
Capital improvements are projects that extend a home’s life, add value or refit a home for new uses. These differ from home repairs, which are part of property maintenance but don’t necessarily add value (like fixing a leak). There are some limitations to the types of eligible improvements. For example, homeowners cannot include the cost of installing carpeting if they later remove it. They also cannot include energy-related improvements if they received subsidies or tax credits for those improvements.
