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