Can You Write Off Home Improvements on Your 2025 Taxes?
We consulted CPAs and dug into the IRS code to clear up misperceptions about home improvement tax deductions and shed light on a few lesser-known tax breaks.
DISCLAIMER: Information in this blog post is meant to be used as a helpful guide and for educational purposes only. It is not legal or professional tax advice. If you need help sorting through your available tax deductions related to the home and otherwise, please consult a skilled tax professional.
Over the past three years, homeowners have been reluctant to embark on significant home improvement and remodeling projects, primarily due to increased economic uncertainty. However, according to the Home Improvement Research Institute, as economic conditions begin to improve, there’s hope that 2025 will spur a renewal of home improvement projects throughout the country.
With tax season right around the corner, many homeowners are wondering, “Can you write off home improvements?” Given the steep costs of bathroom remodels, patio additions, and kitchen upgrades, any potential tax deductions would certainly be a welcome relief.
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Unfortunately, the answer will likely disappoint you.
“The vast majority of home improvements won’t qualify for deductions,” says Stephanie Ng, CPA and author of How to Pass the CPA Exam. The truth hurts, but it’s better to know the tax code than assume your renovation spree will help you save big on what you owe to Uncle Sam.
In this guide, we consulted certified public accountants (CPAs) and dug into the IRS paperwork to clear up misperceptions around home improvement tax deductions and shed light on a few lesser-known tax breaks you might qualify for as a homeowner.
How capital improvements work
Let’s be clear: the cost of your new shower or roof repair won’t directly reduce your income taxes. Confusion arises over online reports that may erroneously refer to an out-of-date federal IRS code that allowed home sellers to deduct “fixing-up” expenses, such as “the costs of painting the home, planting flowers, and replacing broken windows” completed in the 90 days before closing on their home for resale.
That tax break no longer exists.
While you can’t write off home improvements as an item on your income tax return, some home renovations will qualify as “capital improvements.”
Capital improvements can save you from paying more in capital gains when selling your home. Even if you didn’t sell your home during the previous tax year, you should keep track of receipts for any major projects whenever that time comes.
Capital gains on your primary home explained
When you sell a capital asset like real estate, the government typically wants some of the profits. However, as an incentive encouraging homeownership, you can exclude up to $250,000 of profit on the sale when filing taxes as an individual — so long as you’ve lived in it and owned it for at least two of the past five years.
Taxpayers who file a joint return with a spouse can exclude up to $500,000 of that gain. In either case, if your gain doesn’t exceed the maximum limit, you likely won’t need to report the home sale on your tax return.
Capital gains are calculated by taking the sale price of your home minus its adjusted cost basis. “Adjusted cost basis” is a fancy way of saying the home’s original value (i.e., what you paid for it at the time of purchase) plus the cost of any qualifying capital improvements and selling fees like agent commissions.
