Plumbing Repair Tax Deductible
The question of are plumbing repairs tax deductible is something homeowners frequently wonder about. While the answer is yes in some cases, it depends on whether the repair counts as a home improvement or simply repairs the existing structure. The difference between the two can have a significant impact come tax time, so it’s important to understand the distinction before starting renovations.
One way that a plumbing repair can count as a home improvement is if it increases the capital base of your house. This is a measurement of how much your house is worth according to estimates and appraisals, and it controls how much profit you must pay when selling the property. This is an indirect form of tax deduction that helps you keep more of your own money when you sell your home.
Other types of home improvements that may be tax deductible include energy-related upgrades. These can include things like installing solar heat pumps and sustainable water pipes, which reduce your home’s environmental impact and save you a lot of money over the long term. These kinds of upgrades can often qualify you for tax credits that help you get even more bang for your buck when you’re ready to sell.
Are Plumbing Repair Tax Deductible?
In addition to allowing home improvements to be deducted, the IRS also allows you to write off expenses such as electricity for your rental properties or liability insurance that covers accidents on the job. These are known as qualified rental property deductions, and they can help you save a substantial amount of money over the course of your career as a plumber.
Despite this, the IRS doesn’t allow you to write off the cost of regular household plumbing repairs that aren’t related to your business or rental property. This is because the agency defines “repairs” as maintenance that keeps your home in a normal condition but doesn’t add significantly to its value or prolong its useful life.
On the other hand, “improvements” are considered to be a capital expenditure that adds value to your home. For example, replacing your septic system with piping that connects to the city sewer line is an improvement. It increases the value of your home and offsets capital gains taxes when you sell it.
Plumbing business owners are often allowed to deduct expenses such as trucks and tools as well as meals when traveling for work. The standard mileage rate for 2021 is 56 cents per mile, and many plumbers spend a lot of time on the road driving to customer sites or going to parts stores. The IRS also allows you to deduct vehicle expenses for rentals that you own and use for your business, and you can even write off workers’ compensation if you have employees.
