How Will My Basement Remodeling Project Affect My Taxes?

Nearly every homeowner, at one time or another, has dreamed of embarking on an ambitious basement remodeling project. Who among us hasn’t dreamt of a well-stocked basement wet bar, or a media center, or a home office? And if you play your cards right, you may even be able to catch a break on your taxes.

By itself, a basement remodeling project counts as a “home improvement” — which generally means you’re improving the quality of your domicile in some way. What you generally can’t do is deduct the cost of a basement remodeling project from your taxable income, since it’s not something that’s legitimately needed in any way (no matter how much you may think that wet bar is a medical necessity). What’s more, a newly remodeled basement may actually increase your taxes if it adds significantly to the value of your home.

But it’s not all bad news. There are a few creative ways to try for a tax deduction — or even a tax credit — when starting a remodeling project. But keep this caveat in mind: The basement remodeling experts at Rightway are not tax professionals. So before you go marking up your tax return in ink, contact an accountant or tax preparer.

That said, here are a few ways your remodeling project can brighten up your April 15th:

  • A fairly substantial tax deduction is available to anyone who works from home, so any basement remodeling project that results in a home office can lead to deductions. This is complicated — you’ll have to get out a tape measure and determine just how much of your home is used as a home office. And it has to just be a home office; it can’t serve any other purpose. What’s more, the building costs may not be deductible. Check with a tax pro to be sure.
  • If you’re remodeling your basement to accommodate a family member who is disabled or has special medical needs, you’re eligible for a deduction. Handicapped accessibility and any home improvements that are needed for medical reasons can be considered medical expenses, which are tax deductible.
  • If you have to refinance your mortgage to pay for your basement remodeling efforts, that may affect your bottom line come tax time. Of course, this may incur other costs, like interest, so be sure you aren’t pennywise and pound-foolish here.
  • If you can remodel your basement in a sufficiently energy-efficient way, you may be eligible for a tax credit based on the cost of the energy-efficient components of the project. A tax credit is a recognition that you’ve already paid part of your taxes. If your basement remodeling project includes energy-saving appliances (like water heaters), new insulation, windows or doors, the cost of those may be eligible for a tax credit.
  • Finally, if you determine that you’re able to deduct the cost of your basement remodeling project from your income somehow, be sure to check if there are any needed home repairs you can fold into the project. Home repairs — like fixing a cracked foundation or plugging a leak — aren’t eligible for deductions, but if you can include them in a larger improvement project, you may be able to include their cost on your tax forms.

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John and Barbara Vicich

“We wanted to thank you for your personal and specialized attention to the water problem we had in our basement. You took the time to inspect the whole situation and gave us recommendations, all of which worked. You had a way of explaining the process and materials that would be used in a way that we understood. We are very pleased with the work that was done and would highly recommend your company to anyone.”

-John and Barbara Vicich

Debbie, Berwyn

“The day after Hurricane Irene, all of my neighbors basements were filled with water, while mine remained dry! It is wonderful, everything remains dry and the battery backup worked beautifully when my power was out for 2 days. Dry AND quiet, thank you, thank you! Thanks! Debbie, Berwyn”

-Debbie, Berwyn

Doug Smith, Glenside

“All I have to say is that Hurricane Irene was no match for the job that Rightway did for my basement and my father-in-law’s. I had my basement done 5 years ago and we are still bone dry and my father-inlaw’s was done last year and another dry basement… Great job! I highly recommend them for waterproofing and mold remediation.”

-Doug Smith, Glenside


“I’d highly recommend these guys for your basement. My basement has been dry since they installed a sump pump and French drain in June. They offer a competitive price, they get the job done quickly and they stand by their work. Please mention my name if you proceed down the road with these guys.”


Angelo and Sandra Patiri

“We had our basement waterproofed with Rightway Waterproofing in 2007, after all this time and just getting through Hurricane Irene, we did not get a drop of water in our basement. Rightway Waterproofing did a very good job and we are very satisfied!”

-Angelo and Sandra Patiri