Tax Deductions

• If you work from home and you renovate your property for business purposes, you can claim these expenses as your business expense. However, you have to use the renovated part of your home "exclusively and regularly" to conduct business or meet your clients, according to the Internal Revenue Service. If you use the space for storage, rental or daycare, you can claim the deduction if you use the renovated space "regularly but not exclusively."
  
  

Capital Gains

• When you sell your home, you usually have to pay taxes on the sale profits. You may be able to reduce your tax burden at the time you sell the house by claiming the expenses you spent on home renovations. To qualify, you have to improve the property rather than just repair the property. For example, you may be able to claim the expenses of adding a swimming pool or a storage shed, but not the expenses of fixing a leaking roof.
  
  

Loan

• You can claim tax deductions if you take out a home equity loan for any purpose, including repairs and improvements. For example, if you take out a home equity loan or a line of credit, you can deduct some of the interest you pay the lender. However, you can only deduct up to a certain limit. If you get a loan to carry out significant home renovations, no limits apply to the amount of expenses you can deduct. However, these projects have to be capital improvements rather than repairs.
  
  

Tax Credits

• If your home renovations make your house more energy-efficient, you may get tax credits for your expenses. However, you have to meet the criteria set by the government. For example, your new window has to meet a minimum level of insulating ability and your new roof has to be Energy Star-qualified. If you qualify for tax credits, you can claim these credits at the end of the year when you file your income tax forms.