Dear Ali: I recently purchased a home which I had to update. I remodeled the kitchen, painted inside and outside, removed awnings, and replaced the interior doors. Is any portion of the cost of the repairs tax-deductible?
A: If as part of remodeling the kitchen you bought energy-efficient windows, you might get a tax credit on them. Other than that, however, updates of a home that you plan to live in aren't deductible on your yearly taxes.
Some of the improvements will help raise your "cost basis," however. The cost basis is the price that's used to calculate taxes you may owe when you sell the home -- and if your house zooms in value, you'll want to be able to show a higher basis so that you will pay less capital gains tax.
So save all your receipts for that happy day. The IRS won't allow non-structural changes (for example, a new coat of paint) to raise your basis, but you can make an argument that a new kitchen and new interior doors are capital improvements that should raise your basis.
We haven't discussed if your home is an investment property that you're renting out. In that case, suddenly small is good -- minor repairs such as new faucets, light bulbs (and in your case, the painting) are deductible against rental income on your Schedule E.