Recently I was invited to a Better Housing Coalition seminar about Renovation Loans and tax credits. Many buyers looking for a fixer-upper don’t take advantage of the great resources available to them! There is a plethora of information that goes along with these types of loans, so I’ll be doing a mini-series of valuable tips and pointers for those considering buying a Rehabilitation Loan or applying for Tax Credits.
First and foremost, when you’re shopping for your home, there are certain renovations that qualify and those that don’t. This will help you determine what is a good or bad investment as far as where your time and money will be spent.
With Tax Season upon us, Rehabilitation Tax Credits come to mind first. Here are some Qualifying Rehabilitation Expenses:
- walls
- partitions
- floors
- ceilings
- paneling
- tiling
- windows
- doors
- central air system
- heating system
- plumbing
- plumbing fixtures
- electrical wiring
- security systems
- light fixtures
- chimneys
- stairs
- escalators
- elevators
- sprinkler systems
- fire escapes
- custom kitchen cabinets
- other components related to the operation or maintenance of the building
Here are some examples of renovations that do NOT qualify for the Rehabilitation Tax Credit:
- acquisition costs
- appliances
- stock cabinets
- carpeting (if tacked in place and not glued)
- decks (not part of original building)
- demolition costs
- enlargement costs (if increase in total volume)
- fencing
- feasibility studies
- furniture
- landscaping
- leasing expenses
- outdoor lighting remote from the building
- parking lots and paving
- planters
- porches and porticos (not part of original bldg)
- retaining walls
- sidewalks
- signage
- storm sewer construction costs
- window treatment
- new building construction
When looking around for your next investment, remember these qualifying costs that will save you money come tax time!
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