Are Home Improvements Tax Deductible? IRS Rules

A new roof, remodeled bathroom, or accessible entry ramp can cost thousands of dollars, so it is natural to ask: are home improvements tax-deductible?

For most homeowners, the answer is no – at least not as a direct deduction on the federal return for the year the work is done. But certain projects can lower taxes in other ways, and the distinction between a repair, an improvement, and a qualifying medical or business expense matters.

The IRS generally treats money spent on your personal home as a personal expense. Personal expenses are not deductible. Still, improvements may increase your home’s tax basis, certain medically necessary changes may qualify as itemized medical expenses, and different rules apply when part of the property is used for a business or rented to tenants.

Are Home Improvements Tax Deductible for a Personal Home?

Ordinary improvements to a main home are not deductible from your federal taxable income. That includes common projects such as a kitchen renovation, new flooring, bathroom remodel, landscaping, driveway replacement, room addition, or a new heating and cooling system.

It does not matter whether you pay cash, use a home equity loan, or put the project on a credit card. The cost of the project itself is generally not a current write-off.

That answer can feel disappointing, but an improvement can still have a future tax benefit. When you sell your home, qualifying capital improvements can increase your adjusted cost basis. A higher basis may reduce the taxable gain from the sale.

For example, suppose you bought a home for $300,000 and later spent $40,000 on a qualifying addition and a permanent new roof. Your starting basis may increase to $340,000 before accounting for other adjustments. If you later sell for more than that amount, the higher basis can reduce the gain you calculate.

Many homeowners will not owe federal tax on a home sale because they qualify for the home-sale capital gain exclusion. Generally, eligible single taxpayers can exclude up to $250,000 of gain, while eligible married couples filing jointly can exclude up to $500,000. Even so, keeping improvement records is smart. The records can matter if your gain exceeds the exclusion or if you do not meet the ownership and use tests.

Repairs vs. Capital Improvements: Why the Difference Matters

The IRS distinction is practical. A repair keeps your home in ordinary working condition. An improvement adds value, extends the home’s useful life, or adapts it to a new use.

Fixing a leak, patching a roof, repainting a room, repairing a broken furnace, and replacing a few damaged floorboards are usually repairs. They are not deductible for a personal residence, and they usually do not increase your basis.

By contrast, projects such as adding a deck, installing a new roof, building a garage, replacing the entire HVAC system, remodeling a kitchen, or adding a bedroom are generally capital improvements. They are still not currently deductible for most personal homeowners, but they may increase the basis of the home.

The line is not always neat. Replacing a few broken roof shingles is ordinarily a repair; replacing the entire roof is generally an improvement. Save invoices that explain the scope of the work, the date completed, and the amount paid. Also keep canceled checks, credit card statements, permits, and contractor agreements with your home records.

Medical Home Improvements May Be Deductible

Some changes made primarily for medical care can qualify as deductible medical expenses. The deduction is available only if you itemize deductions on Schedule A, and only the portion of total eligible medical expenses that exceeds 7.5% of your adjusted gross income can be deducted.

Examples may include installing wheelchair ramps, widening doorways and hallways, lowering cabinets, modifying bathrooms, adding railings, or installing lifts for a taxpayer, spouse, or dependent with a qualifying medical need. A physician’s recommendation can help support the purpose of the expense.

There is an important limit. If the improvement also raises the home’s value, you generally can deduct only the medical portion. For instance, if a medically necessary elevator costs $25,000 but increases the home’s value by $15,000, the potential medical expense is generally limited to $10,000. Costs to operate and maintain qualifying medical equipment may also be medical expenses if they otherwise meet IRS rules.

Because medical deductions are subject to the 7.5% income threshold and itemizing may not beat the standard deduction, many taxpayers receive no immediate tax benefit. Still, keep complete records. A taxpayer facing substantial medical expenses in one year may benefit from grouping eligible expenses in that same tax year.

Energy Upgrades and Federal Tax Credits

Tax credits and tax deductions are not the same thing. A deduction reduces taxable income, while a credit directly reduces the tax you owe. In prior years, federal energy credits helped many homeowners offset some costs for qualified energy-efficient improvements and residential clean-energy property.

For improvements placed in service during 2026, do not assume those federal credits remain available. The Energy Efficient Home Improvement Credit and the Residential Clean Energy Credit were terminated for property placed in service after December 31, 2025, under changes enacted in 2025.

That does not mean an energy upgrade has no value. Efficient windows, insulation, heat pumps, and solar equipment may still reduce utility costs, and your state, utility company, or local government may offer a rebate or incentive. Those programs have their own eligibility rules and may affect how you calculate a federal credit if a credit is available for an earlier year.

If you are filing a return for 2025 or an earlier tax year, check the rules that applied to the year the property was placed in service. The installation date and product requirements can matter more than the date you signed a contract or made a deposit.

Home Office Improvements Can Have Different Rules

If you are self-employed and have a qualifying home office, expenses related to the business portion of your home may be deductible. The office must generally be used regularly and exclusively for business, and it must be your principal place of business or meet another IRS test.

A repair that benefits only the office area, such as repainting that room, may be fully deductible as a business expense. An improvement that benefits the whole home, such as a new roof or central air system, may be recovered over time through depreciation based on the business-use percentage when using the actual-expense method.

Employees working remotely generally cannot claim a federal home office deduction for unreimbursed expenses. This is a common point of confusion. Working from the kitchen table for an employer does not turn personal home improvements into deductions.

Home office deductions can also create recordkeeping and future tax issues, particularly depreciation recapture when the home is sold. If the amounts are significant, consider speaking with a qualified tax professional before claiming the deduction.

Rental Property Improvements Follow Business Tax Rules

A home improvement made to a rental property is not treated the same way as work done on your personal residence. Ordinary and necessary repair costs for a rental may generally be deductible in the year paid. Capital improvements, however, usually must be capitalized and depreciated over time rather than deducted all at once.

Replacing a broken appliance or repairing a damaged section of a fence may be a current rental expense. Installing a new roof, renovating a unit, or adding a major appliance system is more likely to be an improvement subject to depreciation. The exact treatment depends on the facts, the type of property, and applicable IRS rules.

If you rent out part of your home, you may need to allocate expenses between personal and rental use. Personal-use days, rental days, and whether the space is separately identifiable can all affect the result.

What Records Should You Keep?

Keep records of major home improvements for as long as you own the home, plus the period needed to support the tax return reporting its sale. Digital copies are fine if they are readable and organized. At a minimum, retain invoices, contracts, receipts, permits, proof of payment, before-and-after photos when useful, and documentation showing any medical or business purpose.

Label records clearly. A folder called “2026 roof replacement” is far more helpful years later than a stack of unlabeled receipts. If an expense has mixed personal and business or medical use, write down how you calculated the portion you claimed.

A home project may not create a deduction this filing season, but that does not make the paperwork useless. Good records can protect a future home-sale calculation, support a legitimate medical or business claim, and make a complicated tax question much easier to answer when it counts.