Remodeling is an important investment. After all, revitalizing certain areas of the home helps boost both aesthetic and functionality. Its cost, however, may not sit well with many, although there are options which can make the project possible. One of the more attractive options involves taking out a home improvement loan.
As with any loan, you are obligated to pay for it, including the interest incurred. However, depending on your situation, it is possible that you might get a tax deduction for it. Today’s post from i Remodel & Design, your local kitchen remodeling contractor, tackles this further.
Tax-Deductible Loan Interests
It is possible to deduct loan interest from a home improvement loan on your taxes. Certain limitations, however, must be observed when it comes to using the money for such upgrades. Before claiming tax deductions, it is important that you follow the guidelines set forth by the IRS.
First, you must own the home, and it must be your primary residence. You should also be the borrower named in the home improvement loan. Second, the proceeds of your project must be used to “substantially improve” the property – your home.
Qualifying Capital Improvements
Several common home improvement projects meet the IRS requirements, qualifying them for substantial capital improvement. Adding a room, pursuing a bathroom remodeling project, insulating your home and replacing your roof are some of the examples.
Remember that the amount you spent on your home improvement can’t be deducted from your taxes. Only the amount of loan interest paid can be claimed. Before you take out a loan for such an endeavor, be sure to consult a qualified tax adviser or an accounting pro to ensure the eligibility of your property.
For your remodeling needs, turn to i Remodel & Design. We provide kitchen, bathroom and basement remodeling as well as design-build and home addition services. Call (703) 634-7003 to get started. You may also fill out our contact form to schedule your appointment. We serve residents of Sterling, VA.