Upgrading Windows/Doors Proves Beneficial at Tax Time
Has the rare winter wave in Texas forced you to replace your windows or doors? Or maybe you felt it was time to give your home a fresh new look. Whatever the reason may have been, your home improvement project might just save you a few bucks when you file your taxes.
The Inflation Reduction Act of 2023 has brought a lot of changes to the tax code, including a new home improvement tax break. This tax break is designed to encourage homeowners to invest in their homes and make improvements that can increase their value, energy efficiency, and overall livability. Here's what you need to know about the home improvement tax break from the Inflation Reduction Act of 2023.
What is the home improvement tax break?
The home improvement tax break is a tax credit that allows homeowners to deduct a portion of the cost of home improvements from their taxable income. Specifically, homeowners can deduct 30% of the cost of qualifying home improvements from their federal income taxes, up to a maximum of $3,200 per year.
What are qualifying home improvements?
Qualifying home improvements are improvements that increase the value or energy efficiency of your home. Examples of some qualifying home improvements include:
- Upgrading to energy-efficient windows, doors, or skylights
- Upgrading to a high-efficiency HVAC system or water heater
- Installing solar panels or a geothermal system
- Insulation materials
- Home Energy Audits
It's important to note that not all home improvements qualify for the tax break. For example, cosmetic improvements like painting or landscaping do not qualify, nor do repairs or maintenance work.
How do you claim the tax break?
To claim the home improvement tax break, you'll need to keep detailed records of the cost of the improvements, including any receipts, invoices, or contracts. You'll also need to file IRS Form 5695 with your federal income tax return. This form will ask for information about the cost of your qualifying home improvements and the amount of the tax credit you're claiming.
It's important to note that the tax break is non-refundable, which means that it can reduce your tax liability but cannot result in a refund. If your tax liability is less than the amount of the tax credit, you will not receive a refund for the difference. Be sure to consult with a tax professional to see if you qualify for the tax break and for further information.
Ready to Improve your home?
The home improvement tax break from the Inflation Reduction Act of 2023 is a welcome change for homeowners who are looking to invest in their homes. By offering a tax credit for qualifying home improvements, the Act encourages homeowners to make upgrades that can increase the value and energy efficiency of their homes. If you're planning on making home improvements in the near future, be sure to reach out to Expo Home Improvement for all of your energy-efficient window and exterior door needs.