Are home improvements tax deductible on a personal residence?

No — the IRS does not let you deduct the cost of home improvements on your personal residence in the year you pay for them. Improvements are treated as capital investments: under IRS Publication 523 they add to your home’s cost basis instead. The tax benefit arrives when you sell — a higher basis means a smaller taxable gain.

What counts as a capital improvement under IRS rules?

Work that adds to your home’s value, prolongs its useful life, or adapts it to new uses. Classic examples: a new roof, a room addition, a kitchen or bathroom remodel, a new HVAC or plumbing system, a deck or patio, a fence or retaining wall. Routine repairs — fixing leaks, repainting, patching — do not count and get no tax benefit at all.

How do home improvements reduce taxes when I sell my home?

Each qualifying improvement is added to your cost basis, and your taxable gain is the sale price minus that adjusted basis. Example: a $400,000 purchase plus $60,000 of improvements gives a $460,000 basis, so a $700,000 sale produces a $240,000 gain instead of $300,000. The $250,000/$500,000 principal-residence exclusion applies on top. Keep receipts, contracts, and photos as proof.

Taxes

Are Home Improvements Tax Deductible? IRS Rules for 2026

Q: Can I deduct home improvements for a rental property?

Rental properties play by different rules: improvements are depreciated over their recovery period (27.5 years for residential rentals) on Schedule E, while genuine repairs are deducted in the year paid. The same new roof that only raises basis on your own home becomes a depreciable asset on a rental — which is one more reason to document every project separately per property.

Q: Are there any federal tax credits for home improvements in 2026?

No — for new 2026 work, the federal credits are gone. The 30% Residential Clean Energy Credit (Section 25D) and the Energy Efficient Home Improvement Credit (Section 25C) were both terminated for expenditures after December 31, 2025 by the One Big Beautiful Bill Act. Systems installed and operational by the end of 2025 can still claim the 30% credit on the 2025 return. Separately, HELOC interest remains deductible when the loan is used to substantially improve the home.

Are home improvements tax deductible? For your personal residence, the short answer is no — you cannot write off a new roof or a kitchen remodel in the year you pay for it. But that money is not gone: under IRS Publication 523, improvements add to your home’s cost basis and shrink your taxable profit when you sell. Here is how the rules work in 2026, the five situations where upgrades really do produce a tax benefit, and the federal energy credits that ended last year.

MKD Editorial Team October 19, 2026 6 min read Figures checked 19 Oct 2026

Flat fintech illustration in deep teal and gold on pale cream: a deep teal house surrounded by a gold toolbox, ladder, paint roller, paintbrush and hammer, gold sun above, on a pale cream background, no text. — New roof, new kitchen, new windows: great for the house, but not a deduction on your personal residence.

Key takeaways

Not deductible on a personal residence: the IRS treats improvements as capital investments — nothing comes off the year you pay.
The payoff is at sale: improvements raise your cost basis, which shrinks the taxable gain when you sell.
Repairs vs. improvements matter: only work that adds value, prolongs the home’s life, or adapts it to new uses counts — routine fixes get nothing.
Five real tax benefits exist: home-office deductions, rental-property rules, medical improvements, qualifying HELOC interest, and (through 2025) energy credits.
The 30% federal clean-energy credit ended Dec. 31, 2025 under the One Big Beautiful Bill Act — a 2026 solar install gets zero federal credit.

The short answer: no — not for a personal residence

A $30,000 kitchen remodel or a $20,000 roof — none of it comes off this year’s income (IRS Publication 523, Selling Your Home). A deduction is this year’s benefit; a basis increase is a future benefit.

Repairs vs. capital improvements: the IRS test

Only work that adds to the value of your home, prolongs its useful life, or adapts it to new uses counts as an improvement. The line:

Repair (no tax effect): fixing a leaky faucet, patching a roof, repainting a room, replacing a broken window pane — maintenance that keeps the house in ordinary working condition.
Improvement (adds to basis): a new roof, a home addition, a kitchen or bathroom remodel, a new HVAC or plumbing system, new siding, a deck, a fence, a swimming pool — LegalClarity’s full IRS list has more.

Flat fintech illustration in deep teal and gold on pale cream: a deep teal home-office desk with a gold laptop and gold lamp, a deep teal house with a gold solar panel, and a small gold calculator, on a pale cream background, no text. — A home office, a rental unit, or a medical need: the three situations that turn improvements into deductions.

Where the benefit lands: cost basis at sale

Here is where improvements quietly pay you back. Your cost basis starts at what you paid for the home, and every qualifying improvement gets added to it. At sale, your taxable gain is the price minus the adjusted basis.

Example: you bought a home for $400,000 and put in $60,000 of documented improvements, for a $460,000 adjusted basis. You sell for $700,000: your gain is $240,000, not $300,000 — and the principal-residence exclusion ($250,000 tax-free, $500,000 if married filing jointly, with two years of ownership and use) applies on top (IRS Publication 523 overview).

The IRS does not take your word for it, though. Keep receipts, contracts, and before-and-after photos for every major project — that paper trail is your proof in an audit (Bottom Line’s tax-planning guide).

Exception 1: a home office

If part of your home is used regularly and exclusively for business, the home-office deduction (Form 8829) can make part of your improvements deductible — a proportionate share of costs allocated to the office space counts under the regular method. A guest room that doubles as an office does not qualify.

Exception 2: rental property

For a rental, improvements are depreciated over 27.5 years through Schedule E, and genuine repairs are deducted in the year paid. The same new roof that only raises basis on your own home becomes a depreciable asset on a rental.

Exception 3: medically necessary improvements

A wheelchair ramp, stairlift, or bathroom handrails can be deducted as medical expenses (IRS Publication 502) above the 7.5%-of-AGI floor, limited to the cost minus any increase in the home’s value they create.

Exception 4: interest on a home equity loan or HELOC

The improvements themselves are not deductible, but the interest you pay to finance them can be — only if the loan proceeds are used to “buy, build, or substantially improve” the home securing the loan. Interest on money used for debt consolidation or anything else gets no deduction (IRS Publication 936).

Renovating with thin credit? See our guide on getting a home equity loan with bad credit — only the qualifying-use portion of a mixed-purpose loan counts.

Exception 5: energy credits — what ended in 2025

Note: the Residential Clean Energy Credit (Section 25D) — the 30% federal credit for solar, battery storage, and other clean-energy systems — was terminated for expenditures made after December 31, 2025 by the One Big Beautiful Bill Act (Public Law 119-21). The companion Section 25C efficiency credit (HVAC, heat pumps, insulation) ended on the same date (GoodLeap’s 2026 credit rundown).

A system operational by December 31, 2025 can still claim the 30% credit on the 2025 return, with unused amounts carrying forward. A homeowner-owned system placed in service in 2026 gets zero — the IRS counts the expenditure when installation is complete, so a 2025 contract did not save a 2026 install (LegalClarity’s expiry explainer).

Bottom line

For your personal residence: no deduction now, but a lower tax bill when you sell — provided you kept the receipts. The five exceptions above are where the real current-year benefits live.

Financing the renovation? Run the numbers first

Only interest used to buy, build, or substantially improve your home is deductible — see how to qualify even with less-than-perfect credit.

Home equity loans with bad credit

Sources & further reading

IRS Publication 523 — Selling Your HomeImprovements definition, adjusted basis rules — irs.gov PDF, curl 200, 19 Oct 2026.
IRS — About Publication 523, Selling Your Home$250,000/$500,000 exclusion, ownership-and-use test — curl 200, 19 Oct 2026.
IRS Publication 936 — Home Mortgage Interest Deduction"Buy, build, or substantially improve" rule for home equity debt — curl 200, 19 Oct 2026.
Bottom Line — Are Home Improvements Tax-Deductible?Basis increase, record-keeping, HELOC interest — curl 200, 19 Oct 2026.
LegalClarity — IRS List of Capital Improvements: What QualifiesRepairs vs. improvements with Pub 523 examples — curl 200, 19 Oct 2026.
LegalClarity — When Does the Federal Solar Tax Credit Expire?Sec. 25D terminated for expenditures after 12/31/2025 — curl 200, 19 Oct 2026.
GoodLeap — Key Home Energy Tax Credits Ended in 2025: What’s Left in 202625D + 25C ended 12/31/2025 under OBBBA — curl 200, 19 Oct 2026.