Is Bathroom Remodeling Tax Deductible? (Expert Advice)

By Truman Slate 1 year ago

You probably already know that bathroom remodeling increases your home’s value, but were you aware that they are tax-deductible in certain instances? Don’t get too happy because unless you’re selling your home, it’s unlikely they are, but there are exceptions like all things. Even if the renovation isn’t tax-deductible, you can often use them as tax credits. 

In order to first determine if your remodels are eligible for any type of tax credits or deductions, you first have to decide whether it qualifies as a repair or renovation. If it’s categorized as a minor repair, it’s not tax-deductible. The U.S. Tax Law states that routine maintenance on your home is not tax-deductible because it keeps your home in normal living conditions.  

This information is provided by the team at Arlington Bathroom Remodeling & Design. Speak to one of our experts today to get started with bathroom remodeling Arlington TX!

Home Repair vs. Remodeling

A home repair is anything that restores the home to its original value. These are tax-deductible only if part of the home is used for business or a rental property. For example, if the bathtub leaks and the floor needs to be replaced, it is considered a repair. 

A home remodel is when you modify the house to increase its value. A few examples of these are:

  • New siding
  • New roof
  • Finishing a basement
  • New septic system
  • Built-in appliances

In some instances, you can only claim some of these improvements if you sell your home. Remember, the tax deductions will need to be claimed the year you sell your home and not the year you did the renovations. 

When Are Bathroom Renovations Tax Deductible?

  • Rental property – If you rent your home or even if it’s only part of it, you can offset the cost of renovations by deducting the remodel cost from rental income. 
  • Home office – if you have a designated room for an office, you can use a percentage of the bathroom remodel as a business expense.  
  • Selling your home – To be eligible for a tax deduction, the home improvement has to increase your home’s value and must be claimed the year the house sells. 
  • Energy-efficient – If you upgraded your bathroom to make it energy-efficient, such as solar panels, solar water heaters, energy-efficient toilets, or windows that meet Energy Star program requirements, you might qualify for a tax credit. 
  • Medical care improvements – In order for these to qualify, the primary purpose for the remodel has to be to care for you, your spouse, or dependant that lives in the home. Examples of medical improvements that may qualify are. 
    • Widening of the bathroom doorway
    • Installing handrails
    • Installing a new tub with seating
    • Modifying smoke detectors 
    • Installing bathroom countertops and sinks for wheelchair access. 
  • When you purchase a new home – When you buy your home, if the amount of the mortgage includes the bathroom remodeling, then you can deduct the interest as part of your mortgage interest deduction. 

What You Should Do Before Remodeling Your Bathroom

  1. Set a budget

Bathrooms can become expensive very quickly and cost from $5,000 to $15,000. If you’re doing a high-end renovation, it can end up costing you $25,000 or more. When you set a budget, the most important thing is to stick to it—another word of advice-set aside 10% of your budget to pay for any unexpected costs. 

  1. Decide what you want your bathroom to look like

If you don’t know what you want your bathroom to look like at the end of the remodel, you can pretty much expect to pay extra for contractor mistakes. In addition to what you want it to look like, you also want to consider the best way to maximize your space. Once you have a plan, you can start looking for different bathroom styles and decorations to fulfill your goal. 

  1. Make comfort a priority

Think about the size and age of the people who’ll be using the bathroom. You’ll want to make sure that the dimensions of the shower, toilet, counters, etc., work for people of all heights, weights, and disabilities. For your comfort, adjustments can be made to fit your specifications. 

  1. Compare costs

If you find a faucet or countertop you love, and it’s out of your price range, look for inexpensive ones that look similar. You can easily find lighting, floor, walls, and countertops in similar designs that look like their more expensive counterparts. 

What to Keep In Mind When Considering Your Bathroom Remodeling 

  1. Energy-efficiency

There are two reasons for this. The first is that you may get a tax credit, and it also saves you money on utility bills. Additionally, many times, your utility company will also give you a discount. Things like tankless water heaters, low flush toilets, and faucets, LEd lighting, and windows with the correct star rating are what you need to look for during remodeling. 

  1. Low-maintenance

Choosing finishes that are easy to keep clean saves you time and looks new and fresh for a long time. Another benefit of a bathroom that’s easy to clean and stays looking new brings up your home’s resale value. 

  1. Let in the light

A light bathroom makes it look larger and brings out the beauty of your remodeling. A few ways to brighten your bathroom are installing a skylight or adding a window. If you’re unable to do one of these, choose reflective finishes and surfaces that reflect light, and install lights that brighten darker areas. 

  1. Floors that aren’t slippery when wet

Bathrooms are wet areas in your home, and you need to think about that when choosing the floor. You’re going to want a floor that’s slip-resistant such as small tiles with grout. Make sure to have a mat by your shower to help prevent slip and fall accidents. 

Bathroom Remodeling is a Job For Professionals  

Sure, you may be about to save around $1,500 doing it yourself but are the possible mistakes worth it? Professionals know how to make the shower floor the correct slope to allow water to drain correctly. If you choose to do it yourself and make a mistake, you’ll have standing water causing a slipping hazard. 

How to Find the Right Contractor For The Job

First, ask friends and family for recommendations. If that doesn’t work, you can make a list online and schedule a meeting with them. When making your choice make sure to ask for references, make sure they are licensed, and have the proper insurance. Take your time and make sure you choose someone you can trust to do your job right the first time.