Can I deduct the cost of improvements or repairs I've made to my home?
Generally speaking, you can deduct neither the cost of improvements nor the cost of repairs you've made to your principal residence. (However, improvements to your home for necessary medical care may be deducted as a medical expense, if all requirements are met.) Although the improvements cannot be deducted, they do increase the basis of your home.
Home improvements add to the value of your home, prolong its useful life, or adapt it to new uses. Examples of improvements include the following:
- Paving a driveway
- Paneling a den
- Putting up a fence
- Adding a bathroom
You should add the cost of improvements to the basis of your property. Your initial basis is usually the cost of your property (what you paid for it originally). Improvements increase your basis. If you sell your home in the future, improvements could lower your tax bite because any gain realized is reduced by additions to the basis of your property.
Repairs are different from improvements; repairs keep your home in good operating condition. They do not materially add to its value or substantially prolong its life, and you do not add their cost to the basis of your property. Examples of repairs include the following:
- Repainting your house (inside or out)
- Fixing your gutters
- Replacing broken window panes
Note: An entire repair job may be considered an improvement if items that would otherwise be considered repairs are done as part of extensive remodeling or restoration of your home.