Hello,
Thank you for participating. These are some very good questions that I would love to answer to the best of my ability.
1.
Equipment and materials can qualify for the Nonbusiness Energy Property Credit only if they meet the standards set by the Department of Energy. The manufacturer can tell you whether a particular item meets those standards.
For this credit, the IRS distinguishes between two kinds of upgrades.
The first is "qualified energy efficiency improvements," and it includes:
- Home insulation
- Exterior doors
- Exterior windows and skylights
- Certain roofing materials
The second category is "residential energy property costs." It includes:
- Electric heat pumps
- Electric heat pump water heaters
- Central air conditioning systems
- Natural gas, propane or oil water heaters
- Stoves that use biomass fuel
- Natural gas, propane or oil furnaces
- Natural gas, propane or oil hot water boilers
- Advanced circulating fans for natural gas, propane or oil furnaces
Energy Tax Credit: Which Home Improvements Qualify?
2. Any renovations that you do like floors and windows before renting increase the cost basis of your property and hence increases the depreciation that you can take when you start renting. For expenses after you are ready to rent, you are allowed to deduct any reasonable expenses used in the conduct, maintenance and managing of her rental properties. That includes:
- Utilities
- Taxes
- Necessary and reasonable repairs to the property
- Travel costs incurred while doing business
Rental Property Deductions You Can Take at Tax Time
3. Any major repairs that you make to the house that increase its value, increase the adjusted cost basis of the house. What that means when you sell the property is lower capital gains since the adjusted cost is higher.
Home Improvements and Your Taxes
