As most homeowners know a crucial difference between home repair and home improvement is what can be written off on taxes.
The answer is pretty simple: home improvement – that which adds to a property’s value or prolong’s it’s life, is tax deductible.
Home repair is not tax deductible.
Now many would argue that replacing a leaky kitchen faucet is adding value to a property but the Internal Revenue Service doesn’t see it that way.
A property’s basis – the value of the property including any improvements is what determines if any tax is owed on the sale proceeds. The home’s basis is subtracted from the sale price to determine profit.
However, if the profit is $250,000 or less for a single seller or $500,000 or less for a married couple filing jointly, no tax is owed on the home sale profit.