lynnerself
Senior Member
Joined: Jan 3, 2011 11:42:29 GMT -5
Posts: 4,166
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Post by lynnerself on May 29, 2019 11:42:35 GMT -5
If I recarpet my entire home, can I still deduct the interest if I use my established HELOC? My research is unclear. Interest is deductible if you use the money for "substantial improvements" like a new roof or remodel. But not for repairs or maintenance. I'm not sure where new upgraded carpet falls into this. Does anyone?
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thyme4change
Community Leader
Joined: Dec 26, 2010 13:54:08 GMT -5
Posts: 40,393
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Post by thyme4change on May 29, 2019 12:06:36 GMT -5
If I recarpet my entire home, can I still deduct the interest if I use my established HELOC? My research is unclear. Interest is deductible if you use the money for "substantial improvements" like a new roof or remodel. But not for repairs or maintenance. I'm not sure where new upgraded carpet falls into this. Does anyone? How is a roof not maintenance? Did the house not come with roof? I've never understood any of those laws. I just redid my bathroom and my pipes, because after 60 years, they were falling apart. Maintenance, repairs, improvement? Yes! All three. I won't deduct my cleaning lady, or my new vacuum. |
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resolution
Junior Associate
Joined: Dec 20, 2010 13:09:56 GMT -5
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Post by resolution on May 29, 2019 13:52:17 GMT -5
I'm not sure about how its counted for HELOCs, but when I re-carpeted my rental property it was considered an interior improvement and I had to depreciate it over 5 years rather than writing it off as an expense.
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bookkeeper
Well-Known Member
Joined: Mar 30, 2012 13:40:42 GMT -5
Posts: 1,690
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Post by bookkeeper on May 29, 2019 20:25:56 GMT -5
Do you have enough interest and itemized deductions to get over the standard deduction threshold? I say if it adds value to the home, you are going down the right road.
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tskeeter
Junior Associate
Joined: Mar 20, 2011 19:37:45 GMT -5
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Post by tskeeter on May 30, 2019 0:35:19 GMT -5
Improvement = extends the life of the asset, increases the capacity of the asset, or changes the function of an asset.
Things like roofs are generally considered a separate asset from the structure, the walls and the floors. A new roof extends the life of the roof vs. the roof that was replaced. So, the new roof is a substantial improvement.
The addition of a bedroom or bathroom increases the capacity of the house. A substantial improvement.
Converting a single family home to a duplex changes the function of the home. A substantial improvement.
Cleaning the carpet is maintenance. Replacing the carpet is an improvement. Usually, replacing more than half of an asset is the distinction between maintenance or improvement. Replace six shingles, maintenance. Replace 600 square feet of a 1,000 square foot roof, improvement.
Lynn’s new carpet? In my opinion, improvement. Floor coverings are usually separate assets. One for each type of floor covering. The new carpet is expected to last longer than the remaining expected useful life of the old carpet. So, the useful life of the carpet asset will be extended.
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