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Tax Breaks For Accessibility Remodeling

For those of you preparing your Virginia state tax returns, or planning remodeling and looking to maximize tax credits for next year – – here’s how to get up to $5,000 back if you do accessibility remodeling to accommodate aging in place or other physical challenges. Sadly, the federal bill referenced in this blog, originally posted last September, died before coming to a vote. But, Virginians, you’re good.

Read on . . .

With advances in medical care and increased awareness and implementation of healthy lifestyle choices, aging is a lot more fun than it used to be. Here’s another advantage for 21st-century seniors: tax breaks for fixing up your home so you can stay comfortably as you age.

Virginia offers homeowners a Livable Home Tax Credit equal to 50% of what they spend to retrofit a home to add accessibility features (like ramps, grab bars, and widened doorways), with a $5000 cap.

Alternatively, Virginia homeowners can receive as much as $5000 in credits if they purchase or build a home with accessibility features.

While there is no age limit on who can use the tax credit in Virginia, seniors wanting to make their homes aging-in-place-friendly are one of the largest groups that will find this credit useful.

Maryland considered an accessibility tax credit this year but it was ultimately rejected.

A proposal for a similar credit for federal income tax payers is wending its way through Congress now. House Ways & Means is considering a bipartisan-sponsored bill – – H.R. 5254, The Senior Accessible Housing Act – – to provide up to a $30,000 tax credit over a senior’s lifetime for expenses incurred in making aging in place modifications.  Unlike Virginia’s tax credit, the proposed federal credit would be limited to persons 60 years and older. The federal bill is in the early stages but, if it passes, it could be a real boost to the home improvement industry and a great help to seniors.

For more information about state tax credits for accessibility modifications, see this August 24, 2016, article by Jenni Bergal for the Pew Charitable Trusts.

For details about the federal Senior Accessible Housing Act, see this Sept. 20, 2016, article from National Review.

Wise homeowners consider all financial consequences before remodeling or relocating. Now, go forth and age frugally – – in place if you want to!

Image courtesy of “hywards” at freedigitalphotos.net

Tax Breaks For Accessibility Remodeling

With advances in medical care and increased awareness and implementation of healthy lifestyle choices, aging is a lot more fun than it used to be. Here’s another advantage for 21st-century seniors: tax breaks for fixing up your home so you can stay comfortably as you age.

Virginia offers homeowners a Livable Home Tax Credit equal to 50% of what they spend to retrofit a home to add accessibility features (like ramps, grab bars, and widened doorways), with a $5000 cap.

Alternatively, Virginia homeowners can receive as much as $5000 in credits if they purchase or build a home with accessibility features.

While there is no age limit on who can use the tax credit in Virginia, seniors wanting to make their homes aging-in-place-friendly are one of the largest groups that will find this credit useful.

Maryland considered an accessibility tax credit this year but it was ultimately rejected.

A proposal for a similar credit for federal income tax payers is wending its way through Congress now. House Ways & Means is considering a bipartisan-sponsored bill – – H.R. 5254, The Senior Accessible Housing Act – – to provide up to a $30,000 tax credit over a senior’s lifetime for expenses incurred in making aging in place modifications.  Unlike Virginia’s tax credit, the proposed federal credit would be limited to persons 60 years and older. The federal bill is in the early stages but, if it passes, it could be a real boost to the home improvement industry and a great help to seniors.

For more information about state tax credits for accessibility modifications, see this August 24, 2016, article by Jenni Bergal for the Pew Charitable Trusts: http://bit.ly/2bEAnlc.

For details about the federal Senior Accessible Housing Act, see this Sept. 20, 2016, article from National Review: http://bit.ly/2cwXOOc

Wise homeowners consider all financial consequences before remodeling or relocating. Now, go forth and age frugally – – in place if you want to!

Image courtesy of “hywards” at freedigitalphotos.net

Four Little-Known Tax Deductions for Homeowners

April 15 is fewer than two months away, and you could use all the tax advantages homeownership has to offer, right? To that end, here is a list of four easily-overlooked deductions available to homeowners.

First, a disclaimer: We at HomeWise are in no way tax experts. Please consult a professional tax preparer to be sure you are applying deductions accurately.

  1. Home Office Deduction

If part of your property is dedicated to the regular operation of your trade or business, storage of business inventory, operation of a daycare, or rental use, you can take a deduction based on the total expenses of the home multiplied by the percentage of space used for business or based on a flat $5 per square foot of dedicated business space. For instructions on this deduction, see IRS Publication 587.

  1. Home Improvements for Medical Reasons

The cost of renovations to accommodate the disabled or chronically ill could qualify as a medical expense deduction to the extent that they, together with all your medical expenses, exceed 10% of your adjusted gross income (7.5% if you or your spouse are 65 or older). For a fuller explanation, see IRS Publication 502.

  1. Home Mortgage Points – Even if the Seller Paid Them

Yup. That’s right. If you purchased a home, points paid at closing are likely deductible by you, the buyer, regardless of whether you or the seller paid them. Whether you can deduct them all in the same year or have to spread them over the life of the loan depends on whether you meet certain criteria. You can similarly deduct points paid for home improvement loans. Refinance loan points may only be deducted over the life of the loan. IRS Publication 936 explains it more fully.

  1. Mortgage Insurance Premiums

If you purchased a home with less than 20% down, you probably are paying for private mortgage insurance (the lender’s hedge against you defaulting on the loan.) [As an aside, if you can demonstrate that your current loan principal is less than 80% of the property value, you can petition your lender to get the PMI removed.] Congress has extended through the end of 2016 the deduction for qualified mortgage insurance premiums (including mortgage insurance premiums on reverse mortgages in certain situations), as long as your adjusted gross income doesn’t exceed $109,000 (and your deduction is phased down for every $1000 of income between $100,000 and $109,000). The Mortgage Insurance Deduction is also explained in IRS Publication 936, referenced above.

Wise homeowners pay all the taxes they owe, but none that they don’t. Now, go forth and deduct fully!

Image courtesy of Stuart Miles at FreeDigitalPhotos.net