I’ve seen people try to write off everything from dog houses to questionable “home offices”—the IRS has a sense of humor but not that much.
That’s spot on—folks get creative, but the IRS isn’t buying it. If you’re using a home equity loan, here’s my quick checklist: 1) Was the money used for actual home improvement? 2) Do you have receipts and photos? 3) Is it a legit upgrade (not just a new TV)? If you can answer yes to all three, you’re probably in the clear. Curious if anyone’s actually been audited over something like this… or is it mostly just the fear talking?
I refinanced a couple years back and used some of the equity for a kitchen remodel. I kept every scrap of paperwork—permits, receipts, even before-and-after pics—just in case. Never got audited, but my accountant said the IRS mostly goes after bigger fish unless something looks really off. I’ve heard stories about folks trying to write off swimming pools or fancy grills as “improvements,” but that’s pushing it. Honestly, I think the fear is worse than the reality, as long as you’re not stretching the definition of “improvement.”
Honestly, I think the fear is worse than the reality, as long as you’re not stretching the definition of “improvement.”
That’s pretty much spot on. The IRS isn’t usually interested in someone’s kitchen remodel unless you’re claiming something wild. But I’ve seen folks get tripped up by not keeping track of what counts as a capital improvement versus maintenance. New cabinets? Sure. Replacing a broken faucet? Not so much. Documentation is key, but common sense goes a long way too.
Documentation is key, but common sense goes a long way too.
Totally agree—paper trails matter. I’ve seen folks try to write off repainting or fixing a leaky sink, thinking it’s an “improvement.” It’s easy to blur the lines. Ever tried explaining to someone why a new roof counts but a new water heater might not? Gets tricky fast.
Honestly, I get what you’re saying about the gray areas, but I think sometimes people underestimate how much the IRS looks at intent and not just the receipts. Like, a new water heater could be an improvement if it’s an upgrade, not just a straight replacement. I’ve had CPAs argue both sides—depends on how aggressive you want to get. Personally, I’d rather err on the side of caution and only claim what’s clearly documented as capital improvement. The risk just isn’t worth it for me... audits are no joke.
