Home improvements can make your house more enjoyable and increase its value. Did you know that you can even get tax breaks when you invest in certain improvements? Take advantage of these 4 home improvements to lower your taxes and make your home nicer.
Add a Home Office
Financial Benefit: At least $5 per square foot
If you frequently work from home, then it makes sense to create a home office that will give you a tax deduction. For 2013, home office tax deductions are getting even easier than before.
The IRS has simplified its deduction protocol by giving home offices a $5 deduction for every square foot. You can claim this deduction without filling out a separate sheet, which has been required in previous years.
This makes the deduction easier for you and the IRS. To claim it, though, you need to create a space that is only used for business. An office/play room doesn’t cut it. Neither does an office/video game room.
To make a home office that passes the IRS’s scrutiny, make sure you have a desk, chair, bookshelves, and other items that you use for your business. If you get audited and they catch you with so much as a dog toy, you could face back-taxes (unless you’re a dog trainer).
Upgrade to Energy-efficient Appliances
Financial Incentive: 10 percent of purchase cost
If you purchase energy-efficient appliances before December 31, 2013, you can get a tax credit equal to 10 percent of the appliance’s cost. To get the tax credit, though, you must install the appliance in your principal residence (rental units don’t count). Newly built homes also don’t qualify. In other words, if you’re not upgrading your current home, you don’t get the credit.
Some of the energy-efficient appliances that could help you save money this year include:
- HVAC Systems
- Central air conditioning systems
- Wood-burning stoves
The specific tax credit depends on the kind of device that you buy, so check before you decide which item to purchase.
Improve Home Insulation
Financial Incentive: See rates below
You can also qualify for tax credits by upgrading your home’s insulation. This applies to more than just the insulating material you put in your attic. You can get credits for windows, doors, skylights, and even roofing materials.
There are caps to your tax credits. For instance, you can get up to:
- $200 for windows
- $500 for doors
- $500 for insulation
- $500 for metal and asphalt roofing
Save Money on Insurance and Taxes
Financial Incentive: Depends on your insurer and home
Uncle Sam isn’t the only one who will give you price breaks for making smart decisions. Many insurance companies offer discounts to families that install security systems by lifeshield.com. If you operate your security system and other devices with solar power, then you could get double savings (one from your insurer and one from the government). Of course, you also reduce your chances of getting robbed, which is a pretty big incentive even without the savings.
What home improvement write offs have you used in the past? Now that you’ve read this article, do you plan to apply for credits and writes next year?
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