List of Property Improvements That Are Taxable

by Jamie Lisse
Your warehouse space can generate valuable losses.

Your warehouse space can generate valuable losses.

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When you make improvements to your property, those improvements may be taxable. After making the improvements, the property is typically assessed by the county tax assessor. As a result, the value of the property will likely change due to the taxable improvements, which means that your annual property tax will likely increase.

Interior And Exterior

Building onto your home or office is a property improvement that is generally taxable. This can be something as simple as adding a wrap around porch or deck to the home. Or it can be complex as a second story or a sunroom. Even adding a two-car garage to the property or gutters to a home that did not previously have them is a taxable improvement. Interior renovations, such as adding in a jacuzzi tub or adding a new wall to split one room into two rooms, can also be taxable improvements.

Other Improvements

If you are installing something that did not previously exist, such as adding storm windows, it is a taxable home improvement. If you pave the driveway, which was previously gravel or dirt, it is a taxable improvement. You may also add a swimming pool to the property or a home security system. These are all taxable improvements.

Improvements Vs. Repairs

Property improvements are taxable while property repairs are not. Sometimes there can be a fine line between these two things. For instance, if you replace the roof on your home, it adds value but it is considered a repair and not an improvement. Fixing a broken gutter is also considered a repair and not an improvement.

Tax Details

While property improvements are taxable, a specific list of which improvements are taxable does not exist. Property taxes are generally assessed annually, but the rate varies by locality. If you sell your home after making the improvements, you can add the cost of the improvements to your tax basis. The tax basis is the total amount that you get to deduct from the sales price to get the amount of profit. Turbo Tax notes this importance because the initial $250,000 in profit from the sale of a principal residence is tax free.

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