How Could a Deck Affect My Taxes?

If you’re thinking about adding a deck to your home, you might be wondering: how could it affect my taxes? The addition of a deck can not only enhance your outdoor living space but also impact your property taxes and potentially your tax returns. In this post, we’ll explore the implications of taxes on decks and what you should consider before starting your project.

Tes on Decks illustration

Will My Property Taxes Increase Because of My Deck?

One of the most common questions homeowners ask is whether building a deck will increase their property taxes. The answer is often yes. When you add a deck to your home, it can increase the overall value of your property. Most local tax authorities assess property value based on square footage, and adding a deck increases usable living space, especially if it’s a large or premium addition. Consequently, your property taxes may go up because the assessed value of your home increases.

Can I Deduct My Deck on My Taxes?

While adding a deck may increase your property taxes, there are situations where it can also provide tax benefits. If you use part of your home, including your deck, for business purposes (such as a home office or client meetings), you might be eligible for a partial home office deduction. However, this would require careful documentation to show that the deck is used regularly and exclusively for business.

Additionally, when you sell your home, the costs associated with adding a deck can increase your home’s cost basis. This is important because a higher cost basis may reduce the capital gains tax you would owe when selling your home. Always keep records of the expenses related to building the deck, as this could benefit you at the time of sale.

Understanding Capital Improvements and Taxes on Decks

Decks are considered “capital improvements,” meaning they add value and extend the life of your home. As a result, the costs involved in building the deck can be added to your home’s cost basis. This is different from regular repairs, which are not deductible. If you sell your home, the higher cost basis could lower the taxable portion of your capital gains. Keep all documentation of your deck build to ensure you can take advantage of this benefit.

Conclusion

When planning to build a deck, it’s important to understand how taxes on decks might affect your finances. While your property taxes may increase, the deck could also provide future tax advantages, particularly when selling your home.

If you’re considering adding a deck, now’s the time to explore all the benefits, both for your lifestyle and your long-term financial health. Contact CRUM Style to discuss your project today!

Additional Resources:

  1. www.irs.gov
    Explore information on capital improvements and how they affect your taxes.

  2. www.turbotax.intuit.com
    Learn more about home improvements and possible deductions.

  3. www.nadra.org
    Find certified deck builders and resources about the value decks add to your home.