If you are planning to remodel your modular home this summer and if the home remodeling project is tax deductible, then remodeling your kitchen might cut down the amount of tax you need to pay. Even though savings are always welcome, you should be aware about the guidelines set by the IRS.
If you have no proper knowledge on tax-deductible modular home remodeling projects, it is wiser to get in touch with your accountant and modular home manufacturer, as they might be able to help you in that. Below are a few guidelines that might help you avoid a number of problems.
The US tax laws have firmly asserted the fact that the repairs made to a modular home or a site-built home are not tax deductible. So, fixing the broken floor of your modular home will not be counted as a tax deductible project. However, if fixing the floor of your house is a part of a bigger home remodeling project, then you can claim it as a tax deduction.
Home remodeling projects such as remodeling the kitchen or bathroom of your home are usually considered as a home improvement. This is because these projects add more value to the house and improve the amenities of residents. Tax deductions can be claimed on a number of home improvement projects, particularly when it is for medical reasons.
Many homeowners find it extremely difficult to identify the home improvement projects that are qualified as tax deductive due to the complexity of the IRS regulations. So, consult with your local IRS office because they will be easily able to provide definitive answers to your queries.
The first and foremost thing to do is to understand the difference between a tax credit and a tax deduction. A tax deduction will not come from income, which means that you will have to pay less tax while a tax credit comes directly from the tax amount. So, it is better to claim a tax credit. Adding cooling equipment and double pane windows usually qualify for tax credits.
If you are planning to claim a tax deduction for your home improvement project, you should keep all the receipts at hand. This will enable you to produce complete documentation for backing up your claim if the IRS questions you during the project.