Are Home Improvements Tax Deductible in California?

As a California homeowner, you might be wondering, are home improvements tax deductible? Especially if you’re struggling with the cost of repairs or renovations, knowing if you can get a tax break can make a big difference in your decision-making process. After all, improving your home can be expensive and time-consuming. Whether it’s upgrading your kitchen, fixing that leaky roof, or finally adding energy-efficient windows, it’s important to know what financial relief might be available through tax deductions.

But here’s the thing: not all home improvements qualify for a home improvement tax deduction. In this article, we’ll break down which home improvements might be deductible, how to claim them, and—if you’re feeling overwhelmed by the whole process—how Osborne Homes can provide an alternative by offering to buy your home as-is, no improvements required. Let’s dive in!

What Home Improvements Are Tax Deductible?

Before we get into the specifics of tax deductions, it’s important to understand that home improvements are generally divided into two categories: repairs and improvements. Repairs, like fixing a broken water heater or patching a hole in the wall, are considered maintenance and are not tax-deductible. Improvements, on the other hand, are things that increase the value of your home or extend its life, like remodeling a kitchen or adding a new roof.

So, what home improvements are tax deductible? It really depends on the situation, but here are some examples of when home improvements may qualify for tax deductions.

1. Medical-related Improvements

If you or someone in your household needs home improvements for medical reasons—such as adding ramps, widening doorways, or installing an accessible shower—these costs may be deductible as medical expenses. However, only the amount that exceeds any increase in your home’s value can be claimed as a deduction. For more information, refer to the IRS Medical and Dental Expenses Guide​

IRS

2. Energy-efficient Upgrades

Making your home more energy-efficient can qualify you for federal tax credits, which are not exactly deductions but still help reduce your tax bill. Installing solar panels, energy-efficient windows, or upgrading insulation can qualify for tax incentives. California homeowners should definitely explore these options to lower energy bills and taxes. You can read more about energy-efficiency credits here​

TurboTax

3. Home Office Improvements

If you run a business from your home or have a dedicated home office space, certain upgrades related to that area might qualify for a home improvement tax write-off. Improvements like upgrading the flooring, adding insulation, or painting the office can be deducted as direct expenses if the space is used exclusively and regularly for business purposes.

Additionally, other costs like a portion of your utilities, homeowners insurance, and property taxes can be written off based on the percentage of your home used for business. For instance, if your office takes up 15% of your home’s square footage, you may be able to deduct 15% of your utility bills and other home-related expenses​

To learn more about the IRS rules regarding the home office deduction, check out the IRS home office deduction guidelines.

Now, this is where it gets tricky. While these types of improvements might qualify for deductions or credits in specific cases, they don’t apply to everyone. For the average homeowner, home improvements are considered “capital expenses,” which means you can’t deduct them immediately. However, they may reduce your tax liability when you sell your home.

Key Tax-Deductible Home Improvements in California

This chart highlights the most common types of home improvements that could qualify for tax deductions or credits. California homeowners can benefit from medical-related upgrades, energy-efficient improvements, and home office enhancements. These upgrades may not only help reduce taxes but can also add value to your home. Keep this in mind before making big decisions about renovations or repairs.

How to Claim Home Improvements on Taxes

It’s important to know how these deductions work when filing your taxes. While you can’t typically deduct home improvements right away, certain improvements can be added to the cost basis of your home. The cost basis is the original value of your home plus the cost of improvements, which can lower the capital gains tax you owe when you sell your home.

Keep Detailed Records

When you make an improvement to your home, whether it’s a new roof, remodeled kitchen, or added energy-efficient windows, keep all receipts and records of the expenses. These documents will come in handy when you sell your home and want to lower your taxable gain.

Add to Your Home’s Cost Basis

Instead of deducting the cost of home improvements immediately, you add them to the “cost basis” of your home. For example, if you bought your home for $300,000 and spent $50,000 on improvements, your cost basis becomes $350,000. When you sell the home, your taxable gain (the difference between the sale price and your cost basis) will be lower, reducing the amount of capital gains tax you owe.

Use Tax Credits for Energy-Efficient Upgrades

For specific energy-saving home improvements, you can qualify for tax credits. Unlike deductions, tax credits reduce your tax bill dollar-for-dollar. Make sure to include any energy-efficient upgrades on your tax forms, as they can save you a significant amount of money.

While learning how to claim home improvements on taxes might seem overwhelming, keeping good records and staying organized can make the process smoother. But let’s be honest, if you’re already struggling with the cost of these improvements, going through the effort of filing for deductions might feel like just another headache.

Should You Make Home Improvements Before Selling?

Here’s the big question: should you make home improvements before selling, or is it better to sell as-is? Many California homeowners facing financial strain wonder if the money spent on repairs and upgrades will pay off in the long run. You might be thinking that improving the kitchen or updating the bathrooms could bring a higher sale price, but that isn’t always guaranteed.

Cost of Improvements

Let’s say you spend $20,000 on a kitchen remodel. While this may increase your home’s value, it might not increase it enough to cover the full cost of the renovation. In some cases, the increase in sale price doesn’t justify the expense, especially when you factor in the hassle and time required to complete the work.

Time and Stress

Making home improvements takes time, energy, and resources. If you’re already stressed financially, the idea of spending thousands on repairs might feel overwhelming. From finding contractors to dealing with potential delays, the process can add unnecessary stress to your life.

Selling Your Home As-Is

At Osborne Homes, we understand that making expensive home improvements might not be an option for everyone. That’s why we offer a hassle-free alternative. We buy houses in California as-is, meaning you don’t have to worry about costly upgrades or time-consuming repairs. Instead of stressing over whether your home improvement will pay off, you can sell your house directly to us for cash and move on with your life.

The Osborne Homes Alternative: Sell As-Is

If the thought of making improvements, handling repairs, and navigating the tax system seems too much, Osborne Homes has a solution. You don’t have to worry about what home improvements are tax deductible or stress about capital gains when selling your home. We buy homes as-is, meaning you don’t have to lift a finger to clean, repair, or improve your property.

No Repairs Needed

We purchase homes in any condition, so whether you have an outdated kitchen, peeling paint, or leaky pipes, we’re ready to make an offer.

Quick Sale

We know time is valuable, especially when you’re struggling financially. Our cash offers can help you avoid months of waiting and uncertainty.

No Agent Fees or Commissions

When you sell your house directly to Osborne Homes you avoid the traditional real estate fees that can eat into your profits. There are no hidden costs or commissions.

Relieve Financial Pressure

Selling your home as-is for cash can give you the financial breathing room you need, without worrying about tax deductions or improvements.

Osborne Homes provides peace of mind for homeowners who don’t have the time, money, or energy to handle home improvements and the complicated tax details that go along with them.

Skip the Stress of Home Improvements—Sell to Osborne Homes!

So, are home improvements tax deductible? While some may qualify for deductions, like medical-related upgrades or energy-efficient improvements, the process can be complicated and not immediately beneficial. Instead of worrying about tax deductions or pouring money into costly renovations, Osborne Homes offers a hassle-free alternative. Sell your home as-is for cash, without the need for repairs or updates, and get quick financial relief.

Sell Your Home for Cash