Remodeling your bathroom can cost up to $40,000 or more, depending on the scope of the project and the appliances you’re installing. Unsurprisingly, you’re a little hesitant to commit to that price tag without thinking through the financial benefits. Can remodeling your bathroom qualify you for any tax deductions or incentives?
At ZINTEX Remodeling Group, we’ve helped thousands of homeowners transform their tubs, showers, and full bathrooms, and we know how important smart budgeting is to all of our customers. Read on to discover what we know about the bigger financial picture, including the potential tax incentives.
Table of Contents
- Who Qualifies for Tax Deductions and Tax Credits for Bathroom Remodels?
- What Bathroom Upgrades Aren't Tax Deductible?
- How to Maximize Your Tax Savings During a Bathroom Remodel
- Additional Financial Benefits of Bathroom Remodels
Who Qualifies for Tax Deductions and Tax Credits for Bathroom Remodels?
You’re not likely to see the same clear-cut tax incentives when remodeling part of your home as you would, say, buying your first house. However, some homeowners may qualify for smaller tax deductions or tax credits if they meet very specific criteria.
Tax Deductions for Medical Home Improvements
Certain home renovations made for medical reasons could qualify for a federal tax deduction. Are you remodeling your bathroom to accommodate a medical condition or physical disability? You may be able to deduct some or all of the costs of the remodel as a medical expense.
Examples of medical-related bathroom remodels might include:
- Installing a walk-in tub
- Widening doorways to accommodate a wheelchair
- Adding grab bars for safety
- Installing an ADA-compliant 19-inch toilet
- Lowering bathroom countertops for wheelchair accessibility
To qualify for a medical home improvement deduction, the remodeling expenses must be deemed medically necessary by a licensed doctor. Additionally, the costs must exceed a certain percentage of your adjusted gross income (AGI).
Enhancing bathroom accessibility without doctor’s orders, while a great way to improve safety in the home, won’t yield a tax deduction. This is because it isn’t considered “medically necessary” unless prescribed. Making a single lower-cost change (such as installing grab bars in your shower) may not qualify if it doesn’t meet the cost criteria. Always consult a tax professional before claiming this type of nuanced deduction.
Tax Credits for Energy-Efficient Improvements
Some home remodels that focus on energy efficiency may qualify for tax credits, not deductions. While deductions reduce your total taxable income, credits reduce your tax liability, or what you actually owe. Either way, you’re looking at the chance to have more money in your pocket in April.
The IRS does offer tax credits for certain energy-efficient improvements, although you won’t see them from the changes you make in your bathroom. Instead, you can qualify for tax credits by upgrading things like:
- Exterior doors and windows
- Electrical wiring
- Water heaters, furnaces, or hot water boilers
In other words, even if you install EnergyStar light fixtures and a low-flow toilet in your bathroom remodel, you won’t see any direct federal tax benefits from those improvements. However, if you also decide to upgrade your water heater to a qualifying product, you’ll enjoy a reduction in your tax liabilities.
Remember, these credits are only available for products that meet certain energy-efficiency standards. The availability and specifics of these credits may vary year by year. It’s important to stay updated on any changes to tax laws and available incentives.
What Bathroom Upgrades Aren’t Tax Deductible?
For the vast majority of homeowners, bathroom remodels will not be eligible for tax deductions or credits. These projects are typically considered personal improvements and do not provide a tax benefit.
Here are a few specific situations where a bathroom remodel will not qualify for tax deductions:
- Aesthetic Changes: Cosmetic updates like painting, installing new mirrors, or upgrading the décor.
- Routine Home Maintenance: Updates aimed at simply maintaining the home, like fixing leaks or replacing faulty fixtures
- Increasing Home Value: Home improvements designed to increase the market value of your home, like upgrading the tub and shower or replacing aesthetically outdated cabinetry
How to Maximize Your Tax Savings During a Bathroom Remodel
Maybe you’re reading this guide and have reason to believe that your recent bathroom upgrades will qualify for tax deductions or credits. Here are a few tips to make sure you maximize your tax incentives this year.
1. Keep Detailed Records
If you think your remodel might qualify for medical or home office deductions, it’s crucial to keep detailed records of the project. This includes receipts, invoices, before-and-after photos, and any relevant medical documentation or tax forms. Organized records will help you substantiate your claims when it’s time to file taxes.
2. Consult a Tax Professional
Because tax laws can be complex and subject to change, it’s always a good idea to consult with a tax professional before embarking on a remodel. A professional can help you navigate the potential deductions and credits available. This is to ensure that you comply with all IRS rules and maximize your potential tax benefits. Remember, making unqualified tax claims or failing to file the proper documentation exposes you to the risk of an IRS audit.
3. Look Into State or Local Incentives
In addition to federal tax credits, some states or local municipalities offer their own incentives for energy-efficient or medically necessary home improvements. Be sure to research what incentives are available in your area, as they can provide additional savings or rebates. This is another area in which a tax professional can be of assistance.
Additional Financial Benefits of Bathroom Remodels
Even without applicable tax incentives, a bathroom remodel can deliver some unbeatable financial benefits. These include:
➡️Increased property value: a mid-range bathroom remodel can yield an ROI of up to 73% when you sell your home
➡️Lower utility bills: Upgrading your bathroom appliances and plumbing can significantly lower the amount of water and energy you use to meet your bathroom needs, which can help to cut down your monthly utility bills; for example, simply replacing a pre-1994 toilet can cut down water use by up to 5.4 gallons per flush
➡️Lower maintenance costs: assuming your new bathroom appliances are properly installed and warrantied, you likely won’t need to pay out of pocket for professional maintenance for several years, whereas older appliances and plumbing may require frequent servicing
Is the Bathroom Remodel Cost Worth It for Your Family?
It makes perfect sense to approach a major financial commitment with questions and concerns. Is there a way to recoup some of the investment you’ll need to make to transform your bathroom? No, bathroom remodeling tax deductions aren’t exactly common. However, they’re also only one of several ways that you could financially benefit from your new bathroom.
At ZINTEX, we want to make sure every homeowner has all the information they need to make a decision that meets their financial and functional goals. Next up, discover the best shower and bath remodels for senior safety.
FAQs About Bathroom Remodels
Q: Can I pay off my bathroom remodel in installments?
We offer several financing options to ensure that financing is available to all of our customers. On average, ZINTEX customers pay monthly payments of $200 to $400 per month, depending on factors like their credit score and the cost of their remodel project.
Q: Does ZINTEX offer any financial incentives to help lower remodel costs?
At ZINTEX, we often offer promotions and discounts on our remodeling services. We also offer a referral program with discounts that you can apply to your remodeling costs retroactively. Through this program, customers can knock off up to $250 from their remodel cost for every friend, relative, or neighbor they refer.
Q: How do warranties protect remodel investments?
Warranties provide financial protection if your newly remodeled space sustains covered damages. For example, if you notice a manufacturer defect after installation, a manufacturer’s warranty should cover any related costs to address and repair that defect. The same goes for installation mistakes. Your labor warranty should cover the cost to fix these mistakes and repair any residual damage.
