| When you are considering doing some work on | | | | incorporate your repairs into a home |
| your property, you need to consider whether | | | | improvement project and still gain a |
| it will fall under the category of home | | | | financial advantage. If you were undertaking |
| repair, or home improvement. This is a | | | | a large remodeling task, you would be doing a |
| crucial distinction because home improvements | | | | lot to improve your property and increasing |
| are tax deductible, whereas home repairs are | | | | the value, and if you were doing some repairs |
| not. | | | | as part of this project, expenditure for the |
| | | | whole task could be tax deductible. In other |
| So what constitutes home improvement? In its | | | | words, next time you plan to add an extra |
| basic form, it is any task that will add to | | | | room to your home, be sure to fix the leaky |
| the quality and therefore the value of your | | | | roof at the same time! |
| home. Such tasks would include putting up a | | | | |
| new fence, installing a new driveway, | | | | If you require refinancing to pay for your |
| complete kitchen remodeling, extending your | | | | home improvements, you may be advised to wait |
| property to add a room, building a swimming | | | | for a drop in interest rates. If you obtain |
| pool or garage, constructing a deck or porch, | | | | refinance and use the capital for home |
| adding insulation, installing new heating or | | | | improvements, you will be able to deduct the |
| air conditioning systems, replacing the roof, | | | | loan points in that same financial year. If |
| or re-landscaping your yard. All of these | | | | you choose not to use the capital to pay for |
| tasks will require capital expenditure, but | | | | home improvements, the points will be |
| will add to the value of your property and | | | | deducted over the term of the loan. If you |
| increase the equity in your home. | | | | use only a portion of the loan for home |
| | | | improvements, then your possible deduction is |
| Home repair, on the other hand, is a task | | | | also proportional. The rest of the points |
| undertaken to prevent the decline or decay of | | | | will be deducted during the term of the loan. |
| your property, and a subsequent drop in | | | | Any points not deducted by the final payoff |
| value. The task is necessary to maintain your | | | | date of the loan will be cent per cent |
| home to its existing standard, without making | | | | deductible in that year. |
| significant additions or improvements. Home | | | | |
| repairs include repainting or decorating, | | | | Before you start work on your home, you |
| fixing leaks or breakages, repairing cabinets | | | | really need to understand the various |
| and replacing fixtures that no longer | | | | distinctions that allow or disallow tax |
| function. | | | | deduction. You can then make a decision |
| | | | whether it would be financially prudent to |
| Generally expenditure on home repairs cannot | | | | expand your project beyond simple repairs to |
| be used to obtain a tax benefit. However, | | | | increase the value of your property and |
| there is a possibility that you could | | | | ensure your expenditure is tax deductible. |