Whether you're planning to flip a property or simply want to improve the value of your home, it's a good idea to prioritize projects that count as capital improvements. A capital improvement to your home is an expense you can claim on your taxes after you sell the property.
But what exactly does capital improvement mean? Here are some common questions and answers:
Not all home improvement projects count as capital improvements. An investment in the construction of new buildings is considered an investment of significant value and an improvement of property. This usually involves building or remodeling the structure.
In contrast, repairs are either preventative or routine maintenance. This would include work to fix or replace an existing asset.
Here are some of the most common examples of capital improvement projects:
Capital improvements generally increase the price of an asset, but also extend its useful life. Under IRS standards, capital improvements must last at least one year after completion. Although the scope of capital improvements varies between individuals, and large property owners make capital improvements.
A common way to finance a capital improvement project is to opt for cash out refinancing. Cash out refinance allows you to replace your existing mortgage loan with a larger one and take out the difference as cash.
Home equity loans and home equity lines of credit (HELOC) are also used for capital improvements. A home equity loan is ideal for a one-time major project, while a HELOC can be beneficial if you're planning multiple ongoing projects of varying expense.
While there is a difference between regular maintenance and capital improvements, one can turn into the other. For example, you might have a leak and hire a plumbing service to investigate and resolve the issue. In evaluating the problem, you find extensive damage requiring replacement of large sections of plumbing.
While repairs and maintenance were originally meant to restore your plumbing's existing function, replacing damaged pipes will extend the useful life of the system and home.
To find out if your planned projects are considered capital improvements, consult a home inspector or tax professional. The more you know about the potential benefits of your hard work and money, the better decisions you can make for your home.
As a lifelong resident of Litchfield County, Heather is quite familiar with the beautiful Northwest Corner of Connecticut. In partnership with her husband at Turri, Inc., in Torrington, she managed and grew a 30+ employee electrical contracting firm that served both the residential, commercial and industrial industries. Currently residing in Goshen she hopes to transfer and utilize many of the skills she learned in contracting to the real estate industry.
Knowing how a vital community relies on its volunteers, Heather spent many hours in several capacities at local organizations that she admires. She serves on the Woodridge Lake Finance Committee and House Committee, Victoria Court Condominium Association (secretary) and Educating Canines Assisting with Disabilities (volunteer and nursery mom). Heather has also been involved with Goshen Community Care & Hospice (president of board of directors), Warner Theatre (board of directors), LARC (volunteer), Festival of Trees (founder), the Northwest Chamber of Commerce, and Goshen Business Circle. Heather also served as Vice President of Woodridge Lake’s Board of Directors.
In Heather’s spare time, she enjoys spending time with family usually in an active way by playing tennis, golf, boating, hiking and skiing.
Heather is honored to be a part of the E.J. Murphy team and hopes you will contact her with any of your real estate needs.
