Are home improvements tax deductible? 

Buying a home is probably the biggest investment you’ll ever make, so it’s natural to wonder if home improvement projects can help during tax time.

It’s worth noting that most upgrades and renovations aren’t tax deductible right away. But some improvements could give you a tax break or affect your taxes when you eventually sell your house.

Updating and maintaining your home can be expensive. You can’t write off the cost of improvements in the year you pay for them. These costs get added to your home’s value for tax purposes, which can be called “basis,” that can help lower your tax bill when you sell.

When you buy a home, your cost basis is generally what you paid for the property, plus major improvements and certain fees. As you make qualifying improvements over the years, you add those costs to your original basis. The total, your purchase price, closing costs and all the capital improvements, is called your adjusted cost basis. This is the number you use to figure out your taxable gain when you sell your home.

Pro tip: “It’s a good thing to increase your cost basis with improvements and keep records of all the costs associated with doing it so that when you go to sell, you can reduce the amount you could be subject to for capital gains,” Lindsay Theodore, certified financial planner at T. Rowe Price, told Homes.com.

Tax rules around home improvements and cost basis can be complex and may vary depending on your individual circumstances. Consult a tax professional before making any big decisions.

For many homeowners, most upgrades and renovations aren’t immediately tax-deductible. But there are a few situations where you might be able to write off what you spend or get a tax break down the road.

• Energy-efficient improvements: The federal government offers tax credits for specific energy-efficient home improvements.  
  
• Renewable energy systems: You can get tax credits available for the installation of renewable energy systems, such as solar panels, solar water heaters, wind turbines and geothermal heat pumps.  
  
• Home office deduction: If you use part of your home only for your business, you might be able to deduct a portion of your expenses such as mortgage interest, insurance, utilities and depreciation. Some improvements to your home office space may also qualify.
  
• Medical improvements: If you make changes to your home for medical reasons, such as adding ramps or widening doorways for a disabled family member, you may be able to deduct those costs as medical expenses.  
  
• Capital improvements: Big upgrades that add value to your home or extend its life (think new roof, addition or major remodel) aren’t immediately deductible, but they can help lower the taxes you owe when you sell your home.  
  
• Landlord improvements: If you’re fixing up your property to make it more rentable, there are some write-offs available.  

Not all the work you do on your home is treated the same way at tax time. Theordore said that a capital improvement is “an investment in the property to upgrade the value, extend its life or make it adaptable for a new use — like adding a deck or a new roof. Simple repairs, like patching a leak, don’t count.” According to the IRS, the property must meet the following requirements:

• Significantly increases your home’s value  
• Prolongs the useful life of the property  
• And is permanent (not just a quick repair)  

You can’t deduct the cost of capital improvements right away, but they can help you save on taxes when you sell your home. That’s why it’s so important to keep all your receipts and records both paper and digital so you can prove what you spent. Home repairs like painting a room usually aren’t tax-deductible for most homeowners. However, if you own a business, are self-employed or rent out your property, you may be able to deduct repair and maintenance costs. When in doubt, check with a tax professional before spending a lot on repairs.

So, what counts as a capital improvement? Here are some common examples:

• Putting on a new roof  
• Installing a new hot water heater  
• Upgrading your furnace or air conditioning 
• Replacing windows  
• Remodeling your kitchen or bathroom  
• Adding wood or tile flooring  

Remember that if you make changes for medical reasons such as adding a ramp or widening doorways, those costs might be deductible as medical expenses.

Some projects may qualify for a tax deduction, while others might get you a tax credit.

• A tax deduction lowers your taxable income before calculating how much you owe in federal taxes.  
• A tax credit directly reduces the amount of tax you owe (or can increase your refund).  

If you made a certain energy-saving upgrades after Jan. 1, 2023, you might qualify for a tax credit of up to $3,200 per year through Dec. 31, 2025. This covers 30% of qualified expenses, such as:

• Qualified energy efficiency improvements installed during the year 
• Residential energy property expenses 
• Home energy audits 

There are limits on the allowable annual credit and the amount of credit for certain types of qualified expenses. The maximum credit you can claim each year is:

• $1,200 for energy property costs and certain energy efficient home improvements, with limits on doors ($250 per door and $500 total), windows ($600) and home energy audits ($150) 
  
• $2,000 per year for qualified heat pumps, biomass stoves or biomass boilers 

It's worth knowing that this tax credit doesn't have a lifetime cap. You can claim the maximum amount each year you make eligible improvements through Dec. 21, 2025. You’ll need to make sure your upgrades come from a qualified manufacturer and report a product identification number on your tax return to get credit in 2025, though. Also, keep in mind: This credit is nonrefundable. That means it can only reduce your tax bill to zero, you won't get money back if the credit is more than what you owe, and you can't carry any leftover credit into future years.

If you run a business from home, you may be able to deduct some expenses like mortgage interest, insurance, utilities and depreciation — if you use part of your home regularly and exclusively for business.

“The home office deduction is now only available to self-employed people and small business owners, not regular employees. The cap for business owners is $1,800 in 2025,” Theodore said.

Ask yourself:

• Do you use part of your home only for business? 
• Is this your main place of business? 
• Do you meet clients or store business inventory there? 

If you answered yes, you may be able to deduct certain expenses. (Form 8829 is used for this deduction.)

If you make changes to your home for medical reasons for yourself, your spouse or a dependent, some of those costs may be deductible as medical expenses. These expenses are fully deductible (within certain limits) if they don’t increase your home’s value.

Examples of fully deductible improvements include:

• Building ramps at entrances or exits 
• Widening doorways or hallways 
• Installing railings, support bars or other bathroom modifications 
• Adjusting fire alarms or smoke detectors for someone with impairments 
• Lowering kitchen cabinets or equipment for wheelchair access 
• Moving or modifying electrical outlets and fixtures 
• Adding lifts for porches or stairs 
• Installing handrails or grab bars anywhere in the home 

Pro tip: “If you add something like a ramp for medical reasons, you can either deduct the cost as a medical expense or add it to your home’s value for tax purposes when you sell but you can’t do both. You can only use the part you didn’t already deduct as a medical expense,” Theordore said.

Not every home improvement counts the same way for taxes, and the rules can get tricky. If you’re unsure, it’s a good idea to talk with a tax professional before making big changes. And always keep your receipts and records for any improvements you make.

After years of upgrading your home, maybe by remodeling the kitchen, adding a deck or putting in new windows, you decide it’s time to move. Naturally, you might wonder: Will all those upgrades make a difference when it comes to taxes at sale? Here’s the good news: If you’ve owned and lived in your home for at least two of the five years before selling, you can exclude up to $250,000 of profit from taxes if you’re single or up $500,000 if you’re married and filed jointly.

• Add up everything you paid for the house: your original purchase price, closing costs and fees.  
• Add the cost of all the improvements you’ve made over the years. This total is called your “adjusted cost basis."
• Subtract your adjusted cost basis from your selling price. The result is your profit or capital gain. 

Remember, your adjusted cost basis is the total — your purchase price, closing costs and all the capital improvements. This is the number you use to figure out your taxable gain when you sell your home.
Pro tip: If you make a profit when you sell your home, you might owe taxes on that gain. The $250,000 (single) or $500,000 (married filing jointly) exclusion applies to the profit you make when selling your primary home. Anything up to those amounts is tax free as long as you meet the residency requirements.

• If you sell your main home for less than you paid, you can't deduct that loss on your taxes. In other words, the IRS doesn’t let you write off losses from selling your personal residence, so it’s something to consider when you decide to list your home.
• If you sold a home before Aug. 5, 1997 and used the old rule to roll over your profit into a new home to delay paying taxes, your cost basis in the new home is reduced by the amount of profit you rolled over. That means you might owe more tax when you eventually sell, since your starting point for calculating profit is lower.

Every situation is unique; check with a tax professional about your specific improvements and how selling your home could affect your taxes.