There are a number of ways by which a person can reduce his tax liability or increase tax refund, of which home improvement tax credit is one. Home improvement includes renovation of home or permanently adding certain items to the house to increase its value as also its habitability. Hence, loans taken for this purpose are eligible for tax deduction. Not only such loans, but also expenses of certain nature amount for qualification for tax credits and deductions. Tax credit differs from tax deduction in that the former reduces the tax liability of a person, whereas the latter causes reduction in the taxable income of a person.
Improvements which come under the purview of home improvement tax credit are:
- Installing energy-efficient items like solar panels, geothermal heat pumps, water heaters that are solar-powered or fuel cells.
- Methods adopted for heating or cooling the home, such as sealing doors, windows, pipes and so on.
- Home improvements, done specially for ailment reasons, such as installing elevator for heart patients to prevent them from climbing the staircase.
- Improving the air filtration of the house by installing centralized air-conditioning systems, removing damp walls, etc helps asthma patients.
- Expenses incurred for accommodating handicapped or disabled individuals such as railings along the staircase, widening the doors of the home, making modifications in the kitchen for helping disabled people, etc.
- Using water heaters that run on certain fuels like propane, gas, oil, etc. is helpful for people living in scarcely populated areas.
- Selecting better doors or windows and making roof improvements are also eligible for the credit.Home improvements can be of two types- splurging on luxuries or addressing basic problems that need immediate attention. Improvements that add to the home’s functional space are valued longer than those that just decorate the look of the house.
Obtaining the loans
For availing loans for home improvement, we need to make an estimate of the amount of money required for such purpose and submit it to the financier or bank. After verifications with the constructors, the financier visits our home. However, some banks inspect the receipts of the payments we make to the contractors and then sanction the loans.
Tax Credit for Home Improvement
The IRS (Internal Revenue Service) lays down strict guidelines by which a home owner can claim home improvement tax credit. Tax benefit for this loans can be claimed just like home loans. Tax credit availed is a percentage of the expenses incurred on home improvement, up to a certain amount. When arriving at the decision for making renovation, one must consider the amount of investment to be made. Although cheap improvements still qualify for tax credit, one can get the maximum benefit out of it by carefully weighing all the qualifications as some improvements do not carry tax credit benefit.
The amount of tax credit is 30% of costs incurred, with no upper limit on the total home improvement tax credit amount. This rate is applicable till 31st December, 2016. Individuals can also avail of income tax benefit of interest up to Rs.30, 000 on the loan (U/S 24 of the Income Tax Act) on self-occupied house. For rented property, tax deduction is not bounded by any limits.
It is advisable for individuals to maintain precise records of all expenditures on their renovations and the receipts of such expenses as it would be of great assistance to them when it is time to claim the home improvement tax credit.
How often do you do your home improvement yourself? The reason I am asking this is because I have realized that most of my friends have been asking me how I manage to buy things now and then. The truth behind the whole story is that I never buy new things, only that I have learned to improve what I have to make to look completely different. The DIY home improvement is a method of improving your home without necessarily involving the services of other professionals. I will not say that the professionals are not good but one thing I know is that when you do it yourself, you are more likely to feel comfortable, and confidence that what you have in your house is your best.
The meaning of DIY home improvement
I know you may hang somewhere in the air not knowing what the DIY means. It simple means Do It Yourself improvement, self explaining that you do everything yourself without hiring someone.
Why the DIY home improvement
There are various reasons why improving my home by myself is the best way to go. Check some of them here;
Cost saving: when I am doing the home improvement myself, there is no cost incurred, and if there is, it will be very much less, for buying items like covers as well small stuffs like those. If you compare this with what the hired services may give, well, they may offer better services than I, but what about their fees, it’s very expensive to keep up.
Convenience: as much as I may accept the fact that hiring professionals have been well guaranteed, there are at times when they do things and at the end of the day, you are not satisfied. There is power behind when you are doing it yourself. In fact this is the very fact why I decided to no longer use the services of the professionals, on discovering that it was more convenience and I felt everything in order when I did the home improvement myself.
Tips to DIY home improvement
Do what you can and leave the rest: I discovered that as I improved my home, there are things that I could easily manage while others made me sick on how to redesign how they look and where they were to be placed. It was from then that I found out that there are things which no matter how creative you are, you cannot manage to improve on them. Issues of the kitchen are well done but what about changing the chair sets and their designs? This is where we accept the services of qualified staff, when you are able to call them?
Have enough time: most of the DIY home improving lessons is not done by a person who is in a hurry. The best days to do their home improvement is when you are on holidays so that you can get enough time to organize everything once again, without making things rush. Rushing in home improvement activities will see you having degraded your improvement rather than upgrading.
Take what you can chew: I remember when we opened one of the big lounge tables, since my wife and I wanted to have another material as well as changing the color of the outer casing. Just when we had removed everything and only the timber frames were left, what we saw as easy became hard, we could not be able to return the new material where the old one was. Accept only what you are able to handle, leave the rest for another time.
Let others give you a hand: the problem with most of us is that we only want to do the improvement without letting others influence them. Did you know that the more people help you, the more they give you ideas on what you even never imagined? Yes, that is how it works. Always let others come to gauge what you are doing, and let them take part in areas where they feel they are best in. There are those who are good in the kitchen improvements while others are good in the table room improvement. Your friends are in no close relation to the professionals who are offering the improvement services. The more they help you, the more you discover that new ideas are coming into life, making the whole thing new-DIY home improvement makes your home look as good as new.
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