As tax season rolls around for another year, many homeowners are looking at their tax bills in awe. It’s pretty common to wonder what methods you can work in the future to deduct your taxes so that you owe less to the federal government. One thing that may come to your mind is your plumbing system and what you can do to help reduce your taxes while fixing and upgrading your plumbing system.
A Note on Plumbing Maintenance
When it comes to the federal government, they don’t provide tax credits to homeowners for regular maintenance of their homes. Things like repairing a leaky faucet or repairing a burst pipe don’t qualify you for any sort of tax credit. Maintenance is one of those expenses that’s expected of a homeowner. The same holds for plumbing inspection services, where your system gets an annual evaluation by one of our licensed plumbers. Our Maintenance Plan makes it easier not to miss, and includes discounts and other bonuses as well.
Home Improvements
One key factor when it comes to claiming plumbing expenses on your tax returns is home improvements. These qualify you to receive tax credits. A home improvement service provides value to your home, extends its lifespan, or adapts your system for new uses.
Energy Efficient Home Improvement Credit
The federal government offers the Energy Efficient Home Improvement Credit (25C) to homeowners who invest in energy-efficient home upgrades. The IRS specifically outlines the maximum amount of credit that you can receive for the particular type of home improvement you do.
For example, if you decide to invest in a heat pump hot water heater for your home, you can claim up to $2,000 in tax credit under this program. A new tankless water heater can net you up to $600. You can check the government’s website for the 25C tax credit to determine what particular plumbing purchases qualify you for this tax credit.
It’s important to note that the total purchase price of your new unit is not what you receive in a tax credit. You can only receive up to 30% of the total combined cost of the new product and installation labor up to the maximum amount set by the government. For example, if you buy a tankless water heater for your home that costs you $1,000 for parts and installation, you can only claim to receive up to $300 or 30% of the total cost in the form of this tax credit. You can combine purchases for multiple items until you reach the yearly maximum credit allowance of $3,200 under this tax credit program.
Examples of Water-Efficient Plumbing Upgrades
There are many different water-efficient plumbing upgrades that you can do to your home that will help qualify you for the 25C tax credit on your federal tax returns. One of the most popular is going to be upgrading to low-flow fixtures. These include things like low-flow shower heads and low-flow faucets that use aerators to mix air with the water. These fixtures allow you to use less water while still enjoying the same amount of pressure.
Another option is to go with a new toilet installation that’s specifically designed to use much less water than other toilets on the market. A high-efficiency toilet uses about 1.28 gallons per flush compared to a regular toilet, which uses around 1.6 gallons per flush. The beauty of these water-efficient plumbing upgrades is that you not only save money on your water bills moving forward but you also get to deduct some of their installation costs as well.
A Note on Home Office and Rental Properties
It’s important to mention that claiming plumbing repairs on your tax returns can be done in two different scenarios. The first is if you have a home office that you work out of and deduct as part of your tax returns. The repair or maintenance expense can be included in the regular expenses for your home office.
The second scenario is when you have a rental property. You can claim the repairs for the rental properties on your deductions for your business tax returns. These are both special case scenarios where you should enlist the help of a tax professional to determine what deductions you’re eligible for.
Exceptional Plumbing Installation Service
Ask a tax professional for more details and find out if you might qualify for credits. For everything else, Winfrey Plumbing offers exceptional residential plumbing services to the Omaha, NE, region, including new installations. We can also help with all your plumbing repair and inspection needs. Simply call us today to book your next service appointment with one of our helpful plumbing professionals.
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