Decorating with Shutters?Uncle Sam wants to share in the cost!
Of all window treatments shutters are the only ones the tax authorities consider a capital improvement. This means that the value of the house increases when you install shutters and the shutters become an inseparable part of your house just like the kitchen and the heating system. A capital improvement is put into the same category as the house itself. So how does it make you save taxes? First of all sales tax, if a homeowner installs shutters in the house, both indoor and outdoor , sales tax does not have to be collected, that can save you quite a bit. Second of all, the cost basis of the house goes up, meaning that when you sell the house you include the cost of the shutters as part of how much you paid for the house. So since you pay taxes on profit that you earn on the house, if your cost basis is more (cost of house + cost of shutters) automatically your taxable income is less. If you don't want to wait until you sell the house to get you tax benefits for decorating with shutters, you can still get a tax deduction if your house is a rental. You can depreciate the cost of the shutters against the rental income of your house over several years. Or even better, if you qualify, you can deduct the full cost of the shutters the first year that you install them by using the section 179 deduction. So depending on your tax bracket you can save taxes of up to 50% of the cost of the shutters. The information in the article above should not be used in any actual transaction without the advice and guidance of a professional Tax Adviser who is familiar with all the relevant facts. The information contained here is General in nature and is not intended as tax advice. Furthermore, the information contained herein may not be applicable to or suitable for the individuals' specific circumstances or needs and may require consideration of other matters. the-window-treatment-expert.com assumes no obligation to inform any person of any changes in the tax law or other factors that could affect the information contained herein.
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