We all have to deal with our taxes because they are an unavoidable aspect of life in the State of Florida. However, there are a number of things in the tax code that can be advantageous to new and old homeowners and possibly result in cost savings when it comes time to file their taxes.You have the chance to save a lot of money now and down the road when you decide to sell your property by making some improvements to your home.

Currently, homeowners who must make home improvements due to medical or health issues are entitled to tax deductions. If you need to make modifications, such as installing a wheelchair ramp, widening doors to accommodate wheelchairs, or adding handrails, these costs might be tax deductible if they are deemed medically necessary.

Also, if you invest in enhancing or improving the energy efficiency of your home, you can qualify for a federal tax credit. By installing solar panels, a geothermal heat pump, a solar water heater,or other eco-friendly appliances, you can lower your tax liability for the year in which these improvements are made.

When buying your home, you must plan ahead, to make it possible to include additional funds for specific home improvement projects within your mortgage. The interest on the entire mortgage can also be written off when you file your taxes, which is a bonus.

In the future, taxes may potentially reduce the profit you make from selling your home. However,you might be able to lower your tax obligation if you made improvements to your house while you owned it. You add the price you paid for the home, fees included, and the price of all the upgrades made over the years to determine the profit from the sale. This sum is known as the adjusted basis, and your profit will be determined by comparing it to the sale price of your home.

Reducing your profit margin can help minimize the taxes you owe. For instance, if you are single,the first $250,000 in profit from the sale of your primary residence is tax-free. For married couples filing taxes jointly, this tax-free threshold is doubled to $500,000.

To ensure that you can maximize your tax benefits, it is crucial to keep receipts for all home improvements, particularly if you plan to reside in your house for an extended period and undertake significant renovations. Having detailed records of your home improvement expenses when it comes time to sell can help you minimize or even avoid paying taxes on your profit.

Ultimately, making upgrades to your home can enhance its comfort and energy efficiency while providing potential financial benefits. Whether it's reducing your tax liability during annual income tax filings or maximizing your profit when you sell your property, keeping track of your home improvement expenses and consulting with an accountant will help you understand how these upgrades will affect your individual tax situation.

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CONSIDER: Since I'm not a lawyer but your neighbor Realtor Associate, you should consult an attorney, financial planner  and your CPA before making any decisions. Let’s start working together. Reach me at 305-776-5677 or register at www.juanmestre.com or email mestre.j@ewm.com.

Sourced and digested from several locations including but not limited to:RisMedia for BHHS.com/blog, EWM Realty, Data from NAR & my knowledge