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