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howardshatonna37
New Member

Hello , I have spent lots of money last year doing home repairs and home improvement., how do I add that to my expenses?

 
3 Replies
GiseleD
Expert Alumni

Hello , I have spent lots of money last year doing home repairs and home improvement., how do I add that to my expenses?

If this was for your personal home (not a rental) and you did not use it for business, there is nothing to deduct. Personal expenses are typically not deductible. The exception to this is credits for energy-efficient improvements. 

 

Here is some general information about these credits:

 

Nonbusiness Energy Property Credit

 

The Nonbusiness Energy Property Credit is for existing main homes. It applies to building envelope components such as doors, windows, insulation, and heat resistant roofs, along with heating, air conditioning, stoves, and water heaters.

 

Credit amount

The total combined credit limit is $500 for all years after 2005. 

 

Subsidized energy financing

Expenditures made from financing provided under a federal, state, or local program, the principal purpose of which is to provide subsidized financing for projects designed to conserve or produce energy, cannot be used to calculate the credit.

 

Carryovers 

The Nonbusiness Energy Property Credit is nonrefundable and unused amounts are not carried forward.

 

Residential Energy Efficient Property Credit

 

The Residential Energy Efficient Property Credit applies to solar and wind power property and geothermal heat pumps. The credit is available for both existing homes and homes being newly constructed.

 

Credit rate 

In 2019, the credit rate is 30% of the cost of eligible property. The cost of labor is included when calculating the credit. For the Residential Energy Efficient Property Credit, (solar and wind power, geothermal heat pumps), there is no annual limit on the amount of credit allowed.

 

In future years, the credit rates are:

 

• 2020: 26%

• 2021: 22% 

 

Qualifying solar panels 

Solar roofing tiles and shingles that serve both as traditional roofing and solar electric collectors qualify for the credit. Structural components such as a roof’s decking or rafters that serve only a roofing or structural function do not qualify for the credit. 

 

Carryovers 

The Residential Energy Efficient Property Credit is not refundable, but unused amounts may be carried forward to the following year.

 

New construction 

The expenditure is considered made when the property is placed in service.

 

Swimming pools and hot tubs 

Costs allocable to a swimming pool, hot tub, or any other energy storage medium which has a function other than the function of such storage do not qualify for the Residential Energy Efficient Property Credit.

 

More information can be found here: Form 5695 Residential Energy Credits.

 

 

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Carl
Level 15

Hello , I have spent lots of money last year doing home repairs and home improvement., how do I add that to my expenses?

Since you posted in the Investors and Landlords section of this message board, I am assuming you are asking your question pertaining to rental property. If so, then understand there is a clearly defined difference between "repairs" and "property improvements". Each is treated/reported differently.

RENTAL PROPERTY ASSETS, MAINTENANCE/CLEANING/REPAIRS DEFINED

Property Improvement.

Property improvements are expenses you incur that add value to the property. Expenses for this are entered in the Assets/Depreciation section and depreciated over time. Property improvements can be done at any time after your initial purchase of the property. It does not matter if it was your residence or a rental at the time of the improvement. It still adds value to the property.

To be classified as a property improvement, two criteria must be met:

1) The improvement must become "a material part of" the property. For example, remodeling the bathroom, new cabinets or appliances in the kitchen. New carpet. Replacing that old Central Air unit.

2) The improvement must add "real" value to the property. In other words, when  the property is appraised by a qualified, certified, licensed property appraiser, he will appraise it at a higher value, than he would have without the improvements.

Cleaning & Maintenance

Those expenses incurred to maintain the rental property and it's assets in the useable condition the property and/or asset was designed and intended for. Routine cleaning and maintenance expenses are only deductible if they are incurred while the property is classified as a rental. Cleaning and maintenance expenses incurred in the process of preparing the property for rent are not deductible.

Repair

Those expenses incurred to return the property or it's assets to the same useable condition they were in, prior to the event that caused the property or asset to be unusable. Repair expenses incurred are only deductible if incurred while the property is classified as a rental. Repair costs incurred in the process of preparing the property for rent are not deductible.

Additional clarifications: Painting a room does not qualify as a property improvement. While the paint does become “a material part of” the property, from the perspective of a property appraiser, it doesn’t add “real value” to the property.

However, when you do something like convert the garage into a 3rd bedroom for example, making a  2 bedroom house into a 3 bedroom house adds “real value”. Of course, when you convert the garage to a bedroom, you’re going to paint it. But you will include the cost of painting as a part of the property improvement – not an expense separate from it.

ciaoskip
Level 1

Hello , I have spent lots of money last year doing home repairs and home improvement., how do I add that to my expenses?

I'll tag on to the other "from a rental perspective" and comment [unprofessionally], don't quote me, that there can be a fine line between the "cleaning and maintenance," and the "repair" categories. Aside from the cut and paste help in turbotax, I've been asking this same thing for years, and my own determination by experience is the first category is the obvious "cleaning" that you would do between renters (turnover) and maybe some literal cleaning during the lease of HVAC ducts, gutters, sidewalks, chimneys, roofs, vinyl siding, and/or other pressure washing examples, etc. Then there are all the "routine" type of work for "maintenance" - e.g., lawn & landscape, HVAC filters, other water filters, caulking (weatherizing), etc. Then, the "repairs" are those often "surprise" type scenarios - e.g., hot water heater fails, vandalism, plumbing, electrical, HVAC, or other misc. appliance failures. 

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