Are home renovations tax deductible? Generally, the answer is no — but there are some exceptions. For example, while you won’t get a tax deduction on expenses related to remodeling your kitchen (even if the new layout looks Pinterest-perfect), you may be able to claim certain tax benefits if you recently made energy-efficient upgrades to your home such as installing solar panels. You may also be able to deduct a portion of expenses paid toward home improvements required for a physical disability or other condition as medical expenses.
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Key Points
• Most home renovations are not tax deductible, including common projects like kitchen remodels, landscaping, and replacing flooring or fixtures.
• Home renovations may be tax deductible if they are for a home office (for the self-employed), for a rental property, or are medically necessary.
• Certain home improvements can reduce capital gains tax when you sell your home.
• Federal tax credits may be available for specific energy-efficient and clean energy upgrades.
• You must keep thorough documentation to claim tax deductions or credits.
Tax Deductions for Home Improvements
It would be nice if you could claim your upcoming renovation or remodel as a tax deduction. Unfortunately, most home improvements are not considered tax deductible. They can still, however, be worthwhile, both by improving the value of your home in the long-term and your enjoyment of it today.
When Home Renovations Are Not Tax Deductible
Here are some common home renovations that are usually not tax deductible. (However, there are exceptions, so keep reading below for the full scoop.)
Kitchen Remodels
Fresh new countertops, an updated range, and a cozy island where you can eat breakfast each morning — there are plenty of reasons to take out a home improvement loan and remodel your kitchen, especially if you bought a fixer-upper. But saving on taxes isn’t one of them.
Certain kitchen renovations such as installing energy-efficient appliances, LED lighting, and improved cabinet insulation can save you real money on your utility bills each month. And of course, a fresh new kitchen can also up your home’s resale value, which can increase your home equity. These are solid financial benefits, just not tax-related ones.
Landscaping
Landscaping is usually not tax deductible, either. But if you’re not regularly using (or at least admiring) your home’s outdoor area, improving your natural surroundings can make for a big quality-of-living boost.
You can also opt for energy-boosting landscaping choices, such as improving shade to reduce cooling requirements in the summer. In fact, according to the U.S. Department of Energy, “carefully positioned” shade trees can reduce your energy use by up to 25%, which is a significant savings to both your power bill and your overall greenhouse gas emissions. Plus, great landscaping also increases curb appeal for owners considering a sale.
Replacing Flooring or Fixtures
Installing new flooring, replacing light fixtures, and upgrading appliances can all increase your home’s value as well as your happiness while living in the house. But again, they’re not usually tax deductible.
When Home Renovations Might Be Tax Deductible
Now that we’ve covered which home improvements are generally not tax deductible, let’s get to the good stuff: the renovations that may provide tax benefits.
Home Office Renovations
If you’re self-employed and you work from home, great news: Renovations to your home office can be deductible expenses. So can mortgage interest, insurance, utilities, repairs, depreciation, and rent.
To be eligible for this deduction, however, you must be self-employed or a small business owner. If you have a salaried job at a company, you unfortunately can’t claim this deduction, even if you work from home. Additionally, the deductions can be used only for the portion of your home that is regularly and exclusively used for business purposes, so an ersatz home office in a bedroom won’t count. However, a dedicated space in the home or a separate structure on the property, such as an accessory dwelling unit or office shed, can.
Rental Property Renovations
If you own a rental property, that home is your business. That means certain types of expenses, including those related to maintenance, can be tax deductible. Repairs to an existing system, such as fixing a leak, are deductible in the year they’re made.
However, home improvements and renovations meant to restore, adapt, or significantly change the use of the home are still not immediately tax deductible. Instead, you may be able to recover some of those costs through depreciation using IRS Tax Form 4562. (In other words, you will deduct the expense gradually each year over the course of its “useful life,” usually set by the IRS as 27.5 years.)
Medical Necessity Upgrades
If you’re making medically necessary upgrades to your home, like installing a wheelchair ramp or an accessible shower, a portion of those expenses may be deductible. The upgrades must be required for yourself, your spouse, or your dependent, and if they increase the value of your home, that increase must be subtracted from the amount you can deduct.
If you financed your home improvements with a home equity loan or home equity line of credit in 2025, the interest you paid may be tax deductible, up to certain limits, provided the loan was used to buy, build, or substantially improve the home securing the loan. In 2026, you may be able to deduct the interest on these types of financing regardless of their use — again, limits apply. Your tax advisor can help you keep up with the changes in this policy.
Reducing Capital Gains Taxes
If you sell a home that appreciates in value, you may owe capital gains tax. That’s because real estate is considered a capital asset. However, smart planning can help you reduce the overall capital gains tax you’re liable for. For example, home improvements that increase your home’s value can help you increase your adjusted basis, which is basically the value of your home plus the cost of any improvements minus any losses.
A higher adjusted basis can reduce your capital gains tax burden because it decreases the difference between what you bought the home for and the price you’re selling at. For example, if you purchased a home for $200,000 and are selling it for $500,000, the amount exposed to capital gains tax is $300,000 — but if you put in $50,000 of home improvements, the amount exposed to capital gains tax is only $250,000. (Ultimately if you own the home solo, you may be able to exclude up to $250,000 in gains provided the home was your primary residence. The exclusion jumps to $500,000 if you own and file taxes jointly with a spouse.)
Tax Credits Related to Home Improvements
Although they aren’t deductions, federal tax credits are still nice and can make a difference in your bottom line come tax time. There are several tax credits available for homeowners who install improvements or upgrades that make their homes more energy-efficient and sustainable, but the timing of the work will be important, as you can see below.
The Residential Clean Energy Credit credits you 30% of the costs of new clean energy improvements such as solar panels and solar water heaters, but only for upgrades installed between 2022 and December 31, 2025. This credit was terminated early by President Trump’s signing of the One Big Beautiful Bill in mid-2025. As a result, new clean energy installations will no longer be eligible for this federal tax credit in 2026 and going forward.
The Energy Efficient Home Improvement Credit, which also expired on January 1, 2026, offers a credit of up to $3,200 to homeowners who upgraded their doors, windows, HVAC systems and other home elements to meet Energy Star Most Efficient certification requirements.
Finally, the Alternative Fuel Vehicle Refueling Property Credit is worth up to 30% of the cost of installing a qualified home EV charging station up to a maximum credit of $1,000 per item. This credit continues to be in place in 2026.
These are all federal tax programs. Bear in mind that there could still be state tax credits for energy-related expenses that are available for the 2025 and 2026 tax years — and beyond. Talk with a tax advisor about your specific situation.
Documentation You’ll Need for Taxes
While the specific documentation you’ll need will vary depending on the credit or deduction you’re after (always check with a tax professional for more details), common documentation you may need includes:
• Receipts and invoices for improvements, showing cost, date, and type of improvement
• Manufacturer certification for energy-efficient products like windows, appliances, and solar panels
• Proof of payment for upgrades, such as bank or credit card statements
• Contracts or work orders for professional labor and services
• IRS Form 5695 for federal energy tax credits
• Depreciation records for rental property improvements
• Proof of homeownership, such as your deed and/or mortgage statement
• Documentation from a doctor for any medically necessitated improvements
You may also want to document the process with before and after photos, not only for potential tax purposes but also for insurance (as well as your own interest in the process).
The Takeaway
While most home renovations are not tax deductible, there are exceptions for those who are self-employed and work from home, own rental property, or install medically necessary upgrades. And there may be tax credits for certain improvements that make a home more energy efficient.
Even if home renovations don’t confer immediate tax benefits, they can be valuable for your personal enjoyment of the property — and can contribute to your equity. A home improvement loan is one way to ensure you can finance the projects that make you happy in your home.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.
FAQ
Are home renovation costs tax deductible every year?
Most home renovation costs are not tax deductible at all, and tax policies can change over time. However, if you own a rental property, you may be able to depreciate your home renovations, in which case you’re essentially deducting the expense gradually over the course of the upgrade’s useful lifespan (generally 27.5 years).
Can I deduct a new roof?
Installing a new roof is generally not tax deductible. However, if you had a more sustainable, energy-efficient roof installed before January 1, 2026, you may qualify for the Energy Efficient Home Improvement Credit, which can be worth up to $3,200.
What if I renovate a rental property I later move into?
Larger renovations or improvements to a rental property are usually not immediately deductible, though smaller repairs and maintenance are. You could, however, recoup some of the expenses through depreciation. If you later move into the property, however, improvements are no longer deductible at all (except in certain circumstances like home office improvements for small business owners or medically necessary upgrades). That means you’d need to stop taking the depreciation deduction on those renovations.
How does the IRS define capital improvements?
Capital improvements to properties are, according to the IRS, those that better, restore, or adapt a property to a new and different use. In general, any home improvement, renovation, or upgrades that adds to your property value is likely a capital improvement.
Can I deduct DIY home improvement costs?
Unless your home improvements are medically necessary or are home office renovations for your business, they are typically not deductible — including if you do them yourself.
Photo credit: iStock/andresr
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