How Will My Basement Waterproofing Project Affect My Taxes?

Basement waterproofing is an important aspect of responsible home ownership. Maintaining a dry basement, free of leaks and foundation cracks, is the best way to keep your home in good working order and avoid expensive repairs down the road. But if you embark on a successful basement waterproofing project, can you deduct the cost from your taxes?

In most cases, no. Basement waterproofing is considered a home repair, and thus isn’t eligible for any kind of tax deduction when it’s done to fix a leak or a crack. But if your waterproofing project is done under the right circumstances, and meets the proper criteria, you may be able to deduct part of its cost, or even get a tax credit. One caveat, however: Get the advice of a trusted tax professional before making any attempt to alter your taxes because of a home improvement project. The best way to run afoul of the IRS is to deduct something that’s not deductible, and basing all your decisions on the advice of one article on a website is never a good idea. With that said, then, here are some of the circumstances under which a basement waterproofing project may qualify you for a deduction or a tax credit:

• The best way to make waterproofing deductible is to fold the overall cost of the repairs into a remodeling project that is eligible. Your best bet here is remodeling your basement for handicapped accessibility, or for a family member with special medical needs. Remodeling for these reasons makes the project eligible for tax deductions.
• If you’re creating a home office, that office is eligible for tax credits. It’s a bit complicated; you’ll have to break out a tape measure and determine what percentage of your floor space the home office comprises. The office also must be just that: An office. You can’t use it for anything else. Such a tax deduction also counts if you’re creating a space for storing samples or items to be sold. And it’s never a good idea to get your merchandise wet.
• One surefire path to reliable basement waterproofing is creating waterproof window wells. This is also a good opportunity to replace your basement windows with more energy-efficient models. And in addition to reducing your heating bills, energy-efficient windows will likely qualify you for a tax credit, or a recognition that you’ve already paid part of your taxes.