For homeowners around the tax season, you’re likely wanting to know about all the tax deductibles and incentives you can claim, and why wouldn’t you? After all, you pay quite a bit in taxes each year, it’s nice to get some of that back. The money you get back could be used to pay off debt, go on a vacation, or continue your home renovations.
One of the most common home renovations is the kitchen. A kitchen is a place of gathering. Whether you like to entertain friends every weekend, or it’s where you spend time with your family, your kitchen sees a high amount of traffic every day. Because of how busy a kitchen typically is, you want it to be in the best shape possible.
But, are kitchen renovations tax deductible?
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Are Kitchen Renovations Tax Deductible?
Unless you work from home, any renovations done to your home, including the kitchen, are not tax deductible. However, that isn’t to say there are no tax incentives you can take advantage of.
Considering what is tax deductible or not will depend on each case. Although kitchen renovations for personal use are not considered a tax deduction, if it falls under home improvement, it could have a few deductible options. However, if you’re simply repairing something in the kitchen, it would not be something you could claim.
For Homeowners
For a kitchen renovation to be considered for tax deductions, it must increase the value of the home. It may not necessarily get your money back when you file your taxes. What it could do, though, is lower the tax bill when you sell your home.
When you do a kitchen renovation before selling your home, you would include the addition to your cost basis of the property. So, when you sell the home, the price of the improvement would come off of the profit you get from selling the property.
It’s important to remember that kitchen renovations aren’t really tax deductible, especially if it’s only repairs.
For Business Owners
A kitchen renovation for a business owner who works from home is something entirely different. If you have a home office as your primary place of work, you could be eligible for tax deductions, including a kitchen renovation. However, you must have a designated office space in your house. You cannot work from the kitchen table and consider that your office.
Another way that a kitchen renovation could be tax deductible is if you’re renting out a portion of the property, or the entire thing. You can claim renovations for rental properties because you’re making a profit off of them. The deduction would come from your income of the rent.
Reach Out to Professionals
When in doubt, it’s best to reach out to the professionals to get a concrete answer. Plumbers Cape Town can help you with quotes on your renovation, and to see how you can use the renovation to benefit you upon tax season.
It’s also good to review the regulations set by the South Africa Revenue Service (SARS). They will have all of the qualifications needed to consider claiming your kitchen renovation.
Lastly, a financial planner will be able to offer you advice on not just deducting any renovations to your property but to also help you budget for the renovation altogether.
In the End…
Kitchen renovations can be tax deductible, but only if you fall under the correct guidelines. Homeowners who have a home business or rent out the property could claim the renovations. If the renovation increases the value of the property and it falls under the home improvement category, you could use that cost as a deductible when you sell the property.
It’s important to know what you can and cannot do before you dive into a kitchen renovation. If you’re relying on it being tax deductible to help pay for the cost, you could be in for a big surprise if you do not ask the right questions and get help from the professionals. Please, don’t hesitate to contact us, we’re here to help.
