Many home improvements are capital improvements. Capital improvements are tax deductible according to the IRS if the home improvements meet a number of conditions. Home improvements are a permanent addition to the home that increases the value of the home. Therefore, home improvements are substantial in which the value of home ownership appreciates, the life of home ownership is extended, and the functionality of home ownership increases.

For example, putting up a fence, adding a room, installing a driveway, implementing a swimming pool, installing a new roof, installing a new built-in heating system are all major improvements.

Capital improvement increases the value of your home. For example, adding a new room increases the value of the home. The new room increases the property’s ability to earn more income. Therefore, the value of home ownership also increases.

Another example, adding a garage increases the value of the home. Tenants will pay extra for a parking space. And again, the new garage increases the property’s ability to generate more income. Therefore, the value of home ownership also increases.

On the other hand, home repairs are not home improvements according to the IRS. Repairs are expenses that keep the property in good condition. And, the rental property owner can claim the expenses in the year the expenses are incurred.

For example, repainting the walls, repairing the ceiling, installing the wallpaper, replacing the carpet, sealing the bonds, and repairing the windows are home repairs.

In order to claim tax deductibles for capital improvements, the homeowner must use the Depreciation Method. The depreciation method is a way to recoup the cost of capital improvements by depreciating the expense over the useful life of the property.