Repair vs. Improvement

• The IRS considers home improvement and home repair as different. Fixing things that are broken or worn out without replacing any of the parts or accessories with new ones is considered a home repair and does not count as a home deduction. If you replace a worn part or accessory with something new and it meets the IRS home improvement guidelines, you can take a deduction or credit. If a repair is located in an area that needs an improvement, the repair also may be included in the deduction.
  
  

Medical Need

• If home improvements and repairs are needed to accommodate someone with a medical condition, the cost of such a repair is deductible. To prove the need of such an improvement, a doctor must write a letter requesting the needed improvement and defining the purpose of such. Keep receipts from the contractors who do the work and the products you purchase. To qualify, the project must be at least 7.5 percent of your annual earnings for the year. Home improvements that fall under this category include those required for someone to manipulate a wheelchair, deal with allergies or accommodate physical ailments.
  
  

Energy Efficient Products

• Replacing appliances or products such as doors and windows for new energy-efficient products also is a tax write-off. Keep receipts from contractors making home-efficiency improvements and any appliances you buy. The materials purchased are a taxable deduction, but labor expenses are not, so make sure the contractor specifies the portion paid for materials and portion paid for services. You can deduct up to 30 percent of the cost of the energy-efficient improvement up to $1,500 limit.
  
  

Home-Improvement Loan

• Part of a home-improvement loan is deductible on your yearly tax filing. When you take out a home equity loan or line of credit to pay for home repairs, you can deduct all of the interest you pay on the loan for the year. The larger a home improvement loan and the more interest you pay, the larger a deduction you can take.
  
  

Donations

• Another way to report home repairs is to donate leftover material to a charitable organization. In this way, you can take a deduction for materials that don't meet the energy-efficient qualifications. You can donate any unused material to a charitable organization and get a receipt for the value of the material. Fill out IRS form 8283, if the deduction for the noncash contribution exceeds $500. Otherwise make a normal itemized deduction for the amount offered on the donation receipt from your tax filing for the year.