At long last, we can turn the page.
Friends, let’s open by stating the obvious: 2020 was a monster bummer year for all of us. We’d all like to wipe the past 365 days from our collective memory. Stephen King novels have nothing on the terrifying horror tale we all just lived through. The year of the COVID-19 pandemic and the Iowa derecho is definitely already disqualified from the running of the best years of the 21st century.
Unless your name is Jeff Bezos (the pandemic-proof Amazon founder saw his net worth skyrocket to $184.8 billion this year), 2020 was most likely a rough go. So as we look ahead to better, sunnier and healthier days in 2021, let’s focus on the most important things: family, health, and our most important investment: Our homes.
With the majority of Americans working from home, they are investing in their homes like never before. Trend Bible’s Joanna Feeley reports 40% of U.S. homeowners still plan on launching post-pandemic home improvement projects in 2021. That’s on top of the 75 percent of American homeowners who have already completed sometime of home improvement project during the pandemic.
Sheltering in place does have its advantages. Americans finally have the time to re-invest in their American Dream.
“People aren’t going on vacations are going out to restaurants, so they’re appreciating their homes more and spending money on them,” Beverly Hills-based designer Claudia Afshar told Barrons.com.
But with Americans’ budget tighter than ever before due to the economic wrath COVID has inflicted on the economy, how you can you finish that much needed home upgrade without it taking a flamethrower to your family’s savings?
The ROI Report
Step One is researching what home improvements are tax deductible and will bring you the biggest return on your investment and sweat equity. There is no better description of a home improvement project than a tax deductible home improvement project.
Uncle Sam gives tax write offs on these types of home improvements:
Making Improvements for Medical Reasons:
A home improvement project that is considered a medical necessity is a guaranteed deduction. For example, installation of entrance ramps, the creation of modified bathrooms, lower cabinets, widened doors, handrails and special doors are all improvements that can be deducted through the medical expense’s deduction.
The important fine print of these type of home improvement tax deductions: the deductions must be considered reasonable and must have a practical use. Alas, architectural and aesthetic purposes do not count. Plus, improvements designed to increase the value of your home cannot be deducted through the medical expense’s deduction.
Generating Tax Credit Energy:
Going green can keep a lot of greenbacks in your pocket. Environmentally-friendly energy-generating modifications can produce energy tax credits worth up to 30 percent of the cost of installation. Solar panels, wind turbines, fuel cells, geothermal heat pumps and solar-powered water heaters all qualify as energy-generating modifications. The best news: Outside of fuel cells, there is no maximum limit on the amount refunded. For example, if you spend $20,000 on installing new solar panels, you would receive a credit of $6,000.
Remember, you must apply for these tax credits during the tax year you make the home upgrades.
Why upgrade your home in 2021?
The answer is simple: Why not. The time for completing needed home improvement projects has never been better. U.S. home prices continue to gain despite the economic downturn as depend for housing skyrockets. That means super home equity for Iowa homeowners.
“People are deciding to add that value (of canceling vacations and eating out) back into their homes as an investment,” contractor Justin Sullivan told CNBC. “They have more confidence in their homes as investments.”
The Home Improvement Research Institute (HIRI) expects U.S. homeowners’ home improvement spending to continue to grow in 2021 after a robust 2020 that saw American home improvement spending reach nearly $440 billion – an 8.7% spike over 2019.
Remember, “No house is immune from needing to be fixed,” as Dream Décor notes. Pinpointing your house’s most pressing improvement and repair needs for 2021 will get you ahead of the repair game, in strong financial position to complete the upgrades on time and under budget, and enjoy a much better year than 2020.
“(American homeowners) desire to make residences safer, more comfortable and more enjoyable has led to a home improvement boom,” Seeking Alpha’s Khyathi Dalal writes.