One of the questions I hear all the time is: I added a sun room (added a deck, replaced the roof, caulked the bathtub, etc.). Can I deduct it on my taxes?
The short answer? No! However, the longer answer requires more explanation and invloves the sale of your home!
Save those receipts and records of any improvements or additions you make to your home (not everyday repairs) because the cost of the improvements/addtiions will be added to the purchase price of your home to determine the cost (basis) of the house when you sell it. The basis is subtracted from the sales price (with certain adjustments) to determine the gain or loss on the house sale.
Right now, with the law allowing people to exclude $250,000 from capital gains on the sale of a house ($500,000 if you are married and are filing a joint return), most people will not have capital gains to report, and capital losses on personal residences are not deductible. However, if you have lived in your house for many years, and if housing prices follow their traditional increases, you may have a fairly large gain that would be minimized or even eliminated by including the improvements in the basis of the house.
Everthing above changes if you operate a business from your home or rent a portion of your home to someone. Contact me for additional details..
