A brand new kitchen definitely increases value in your home, but does it also decrease the amount of taxes you have to pay?

The short answer is kind of. Some kitchen remodels can be tax deductible. But as we all know, taxes are not that straightforward - which also means our answer cannot be that straightforward.

Kitchen remodels can only create tax deductions when you actually sell your home. It can be subtracted from capital gain, thus lowering the amount of capital gains tax you would have to pay. Capital gains tax only applies when you sell your house and you make more than $250,000 filing alone or $500,000 filing jointly (if you’ve owned your house for more than 2 years). Capital gains tax always applies if you’ve owned your house for less than 2 years

Let’s say you have lived in your home for one year and bought it for $100,000. You complete a kitchen remodel for $25,000 and turn around and sell your house for $225,000. The kitchen remodel of $25,000 is deducted from your capital gains - meaning you only have to pay taxes on $100,000 of the profit you make.

But the chances of every kitchen remodel falling into the category of being tax deductible is very small. If you have lived in your house for more than 2 years and wouldn’t make more than $250,000 on the sale of your house - a remodel wouldn’t affect your taxes at all.

As with all tax questions, make sure to ask a tax professional before making any decisions. We are a kitchen remodeling company, after all! Tune in next week to see our latest blog post - and reach out to us at showroom@completelykitchens.com if you have any questions!