If you are looking for a new home this summer, or renovating your old one and replacing appliances, you will want to read this blog before you get too far into your project. That’s because there are loads of tax deductions and tax savings that you can claim, if you do it right.
1. Moving costs. If you are house-hunting because a job change has brought you to a new locale, you’ll likely be able to deduct any moving costs that your employer doesn’t pay. Those include the expenses of packing and moving your belongings to your new home, temporary storage for up to 30 days, insuring your household goods, utility connection costs, shipping pets, and the expenses of traveling to your new home (at 19 cents a mile for 2016 if you drive, 23 cents in 2015), and lodging expenses on the trip and when you first arrive at your new location. You don’t have to itemize your tax deductions to claim moving expenses, and no limitations, income thresholds, phase-ins or phase-outs will reduce what you are allowed to claim. Your new job must be at least 50 miles farther from your old house than the distance between your old house and your old job, and during the first year after your move, you have to work full-time for at least 39 weeks.
2. Expenses buying and selling a home. If you are selling your current home or buying another one, you’ll be able to deduct points that you pay, prorated property taxes and interest on loans. It is likely you won’t be paying tax on the difference between what you sell your old home for and the original cost of that home plus improvements. That’s because you can exclude a gain of as much as $500,000 if you’re married and filing a joint return with your spouse, or $250,000 if you’re single or married filing separately. To be eligible for the full exclusion, you must have owned the home and lived in it as your principal residence for at least two of the five years prior to sale. If you have owned it less than two years you can claim a reduced exclusion if the sale occurred because of a change in your place of employment, health reasons or “unforeseen circumstances” such as divorce, multiple births or job loss.
3. Energy-saving improvements. Solar energy systems, geothermal heat pumps and wind turbines installed qualify for a 30 percent federal tax credit. You can claim this for new or existing structures, and for your vacation home as well as your primary residence.
4, Remodeling projects. Converting a storage attic into a bedroom, building an entertainment deck, or finishing a basement are all smart ways to add usable square footage to a home, increasing its livability and its resale value. New landscaping and paint will give your home a facelift that provides curb appeal. Replacing kitchen and bathroom counters and fixtures and adding mirrors and designer touches in the bathroom will add considerably to the value with relatively little cost.