Know the Difference — Home Repairs vs. Improvements (and Why It Matters for Taxes)

As homeowners, we all spend money maintaining, fixing, and upgrading our homes. Maybe you repaired a leaky faucet, replaced your roof, or added a brand-new bathroom. But did you know that the IRS looks at these expenses differently — and that difference could affect your taxes?

Understanding what counts as a repair versus an improvement (and what qualifies as simple maintenance) can help you maximize your tax benefits and be better prepared when it’s time to sell your home.

Repairs, Improvements, and Maintenance — What’s the Difference?

👉 Repairs
A repair brings something back to its original working condition but doesn’t add extra value. Think: fixing a broken appliance, patching a roof leak, or replacing a single shingle. Repairs are important for keeping your home livable but generally don’t qualify for tax benefits on your primary residence.

👉 Improvements
An improvement increases your home’s value or extends its life. These can be small or large projects, like replacing an HVAC system, adding energy-efficient windows, remodeling a kitchen, or building an addition. Improvements often can be added to your home’s cost basis, which may lower your taxable gain when you sell.

👉 Maintenance
Maintenance preserves your home’s condition and prevents things from breaking down in the first place. This includes cleaning gutters, servicing your HVAC system, mowing the lawn, or sealing your driveway. Maintenance doesn’t typically offer direct tax benefits, but it protects your investment and avoids costly repairs later.

Why Improvements Matter for Taxes

• When You Sell
  The money you spend on improvements can be added to your home’s cost basis (your original purchase price plus improvements). This can help reduce your taxable profit when you sell. Example: If you bought your home for $200,000 and added $50,000 in improvements, your new cost basis is $250,000.
• Energy-Efficient Credits
  Certain upgrades — like Energy Star windows, solar panels, or geothermal heating systems — may qualify for tax credits in the year you install them. Always check current IRS guidelines or consult your tax advisor to see what applies.
• Medical or Home Office Improvements
  Some improvements made for medical reasons (like wheelchair ramps, wider doorways, or grab bars) or to a dedicated home office may qualify for deductions. Again, the key is documentation and eligibility.

Three Ways to Be Prepared

1. Track Everything
   Keep detailed records and receipts for every improvement. Create a simple folder or digital file system so you’re not scrambling years later.
2. Know What Counts
   Remember: not everything is tax-deductible, but improvements add long-term value to your home — and potentially save you money when you sell.
3. Get Expert Guidance
   Tax rules change often. Partner with a trusted tax advisor to understand what applies to your situation. I can also recommend local professionals if you need a referral.

Bottom Line

Repairs keep your home comfortable, maintenance protects it, and improvements can actually put money back in your pocket down the road. By keeping good records and understanding the difference, you’ll be better positioned whether you’re planning a renovation, preparing for tax season, or thinking ahead to selling your home.

If you’ve got questions about your home’s value, what improvements might boost resale potential, or even just how to start organizing your receipts, I’m always here to help.