3 Home Improvement Tax Questions Everyone Asks — And the Real Answers, From a CPA
Americans spend a lot of money buying homes — and a lot of money fixing them up after they move in.
In 2025, U.S. homeowners spent an average of $12,472 on home projects, according to data from Angi. That represented a 3.5% increase from the previous year.
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With so much money at stake, many homeowners look for ways to offset their home improvement costs through different tax strategies.
Here’s a look at three common home improvement tax questions — and the real answers, according to a certified public accountant.
Can I Deduct My Renovations?
This question ranks at the top of the list when it comes to taxes and home improvements, said Chad Cummings, an attorney and CPA at Cummings & Cummings Law who previously worked in finance and tax.
So, can you deduct renovation costs from your income tax returns?
“For a personal residence, the answer is almost always no,” Cummings told MoneyLion.
Instead, most qualifying capital improvements increase a home's tax basis. This can reduce the taxable gain when you sell the home.
“But there is no immediate deduction, and deducting the costs of renovation can constitute tax fraud,” Cummings said.
The key to getting this right is maintaining good records. Cummings advises clients to save all invoices, permits, contracts and proof-of-payment receipts related to home improvement projects.
“A $150,000 renovation without records can become $150,000 of basis the IRS may challenge when the property sells years down the road, resulting in a higher tax bill,” he said.
Are All Home Improvement Projects Treated Equally for Tax Purposes?
Again, the answer to this question is usually “no.”
“Repairs are another issue,” Cummings said. “Repainting a room usually does not increase the basis, while replacing the roof generally does. Mixed projects require careful allocation rather than treating every contractor invoice as a capital improvement — a major mistake I see all the time.”
He also said that tax treatments can vary between personal residences and investment properties, and from state to state. States' tax rules “do not always mirror” IRS rules when it comes to deductions.
Do I Get Tax Credits for Energy Efficient Projects?
Cummings warns clients against assuming that "energy efficient" means "tax credit." In most circumstances, that’s no longer the case.
“The major federal residential energy credits ended after 2025 as a result of the OBBBA (One Big Beautiful Bill Act) that [President Donald] Trump signed into law, although some state incentives may remain,” Cummings said.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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