We added a covered patio to our home this year. Can we take this expense as a tax deduction?
This is probably not what you want to hear, but the answer is no. You should, however, hold onto those receipts as it appears to be a major expenditure – although you didn't happen to mention an amount. Certainly, it sounds as if you improved your home and increased its value. Accordingly, add the improvement to your home to adjust the cost basis upwards. Cost basis becomes important should you ever decide to sell your home, if the tax rules change or your gain is taxable. Current tax rules exclude tax on gains from home sales up to $250,000 (married filing separately) or $500,000 (married filing jointly). To qualify for the exclusion of tax on the gain you must own the home and use it as your main home during at least 2 of the last 5 years prior to selling it. The gain is calculated as the selling price less the cost less improvements. Here you can see how, if you fail to account for the improvements, it could have the impact of increasing your tax in this situation.
Also, should you decide to turn your home into a rental property, cost basis will come into play and be used to determine the amount of depreciation that should be claimed on a rental property.
For now, take the receipts, add them up, place them in an envelope and put with your other important papers related to your home. Then, as a backup measure, scan those documents and back them up in the cloud. Thanks for your question. | 03.07.16 @ 18:55
MoneyTips has a guide to more home improvements that add to the resale value of your house and give you immediate savings. You can read it here: http://www.moneytips.com/home-improvements-that-pay-off | 03.09.16 @ 11:11