7 Renos That May Be Deductible This Tax Season, From Water Pipes to New Outlets

If you renovated your home in 2023 and promised yourself you won’t leave taxes until the last minute this year, here’s an extra incentive to follow through on the latter: Deductions are likely hiding in plain sight. Niche projects, like rewiring your home office or adding pull bars in the shower, as well as something as universally appealing as a home-energy audit, are included in the list of improvements that might qualify for a discount from the government.

Didn’t get to it last year and maybe still waffling? Consider it an investment in both your wallet and your peace of mind; a new report from home insurance group Hippo tallied that one-third of homeowners regretted not doing maintenance or renovations. Ahead, we’re highlighting seven types of upgrades, from new windows to replacing old pipes in a historic home, that could net you money back.

Energy-Efficient Updates

If you made energy-efficient upgrades—like structural improvements or the installation of new systems—at home after January 1, 2023, you can potentially qualify for an Energy Efficiency Home Improvement Credit of up to $3,200. Here are just a few of the projects to check against your books.

• If you installed new exterior windows and skylights that are counted among Energy Star’s “Most Efficient,” you could get a credit of up to $600.
• Did you get a home-energy audit from a pro home-energy auditor last year? You could get a tax credit of up to $150. If you haven’t, consider it in 2024: According to the Department of Energy, a home-energy audit could help you save up to 30% on your energy bill. If you want to get crunchy on what’s covered or not, dig in here.
• It might be a little niche, but if you picked up a biomass stove that meets Energy Star’s requirements, you could get a $2,000 credit.

Home Office Repairs and Improvements

Working from home has many benefits, not the least of which is that you may be able to deduct home office repair expenses (to note, improvements don’t count here). If the area where you regularly work required maintenance last year, like replacing damaged outlets and wiring or getting new windows that are dual- or triple-pane, we suggest looking through what is tax deductible. You could even potentially deduct the cost of maintaining and monitoring a home-security system if it relates to your business. The big thing to remember is that the amount you can deduct depends on whether the project impacts the entire home or just the office.

Clean Energy Updates

The Residential Clean Energy Credit might apply to your taxes if you installed new renewable energy properties. Barring a few exceptions, there is no dollar limit for this credit. Perhaps the best-known renewable energy products are solar panels, but there are others on the market that will count for this credit, too, like a solar water heater, geothermal heat pump, and battery storage technology for when power goes down.

Historic Home Updates

Historic homes might require a fair amount of upkeep, but isn’t it worth it to keep that original character? Plus those improvements may qualify for a Federal Historic Rehabilitation Tax Credit. If you’ve had to take on projects like upgrading old pipes to get up to code, replacing posts or beams for visually similar ones, or installing an entirely new set of stairs that echoes the original, you should review what’s included.

Medically Necessary Updates

You can potentially get deductions for updates that accommodate a disability or aging in place (for you, your spouse, dependents, or those who live with you) as a part of your medical expense deduction. The amount you can include depends on how the improvement impacts your home’s value, so it’s good to review the details closely.

Lowering your kitchen cabinets, crafting pull-down shelves, or adding grab bars in your bathroom could all count, as well as installing modified smoke detectors or other smart monitoring systems like water leak detectors. You might even be able to write off grading, or leveling, pathways around your home to make them more accessible.

Rental Property Repairs

If you rent out a part or all of your home, repair expenses may be deductible from the amount of taxable rental income that comes in. Limitations apply, of course, but repairing bathroom leaks and insulation leaks, as well as weather stripping around doors and windows, may all qualify.

Capital Improvements

Capital improvements differ from home repairs in that they often add value, but they can be a longer-term bet (as in, the investment might not pay off until you sell). There are also some limitations on what can be used for tax deductions. Acts like installing a new HVAC system to replace one more than a decade old, installing a water softener, or putting insulation in an attic can pay off.