Are Home Staging Costs Tax Deductible?
Savvy home sellers and Real Estate Agents understand that in order to get offers and top dollar for their listings in the least amount of time, they need to professionally prepare homes with a professional Home Stager. Current statistics continue to show that Staged homes sell faster and for more than comparable homes on the market. Selling faster actually saves the homeowner money in the long run and they will likely make those dollars back on the sale.
As an Accredited Staging Professional® with Stellar Staging Group, I have been informed that the cost of Staging®, may be tax deductible. Barb Schwarz, ASPM®, IASHP® and The Creator of Home Staging®, provides the following information from CPA/CFE Rob Unger of the accounting firm Judelson, Giordano & Siegel, P.C. “Home sellers can benefit from home staging, as the fees for staging services can be considered as advertising costs, according to IRS guidelines. Since a home stager prepares your house for potential homebuyers, the IRS considers the service as an advertising expense, as long as the home stager has been hired for the sole purpose of selling your home. The costs of staging are subtracted from the proceeds of the sale of the home and decrease the total realized profit. In summary, the IRS’s position is that Staging costs are a legitimate selling expense for both primary and secondary homes and are therefore tax deductible.
However, it is important to note that if a house is staged and then taken off the market before it sells, the staging expenses are not tax deductible.
If a home is used as your personal residence, there are no tax benefits or deductions for making repairs. However, home improvements do provide tax benefits. It is important to understand the difference between a home repair and a home improvement. Home repairs keep a home in good condition but do not make it substantially better than it was before. Examples of repairs include repainting a home, fixing leaks, replacing a broken window, patching a leaky roof and fixing floors. A home improvement makes a property substantially more valuable than it was before the improvement. Examples of improvements are installing a new roof, adding a deck or patio and installing a new heating or air conditioning system. Only home improvements are added to the cost basis of a home.
This includes the fee paid to the professional home stager to dress up the home by renting and placing furniture in the home and adding various decorative items such as artwork, plants, table settings and accessories. Once the property is sold, the fee paid to the home stager is deducted from the proceeds of the sale as an expense of sale, thus reducing the profit realized.
There are certain home improvement costs that may not qualify as an advertising expense, but will still reduce the profit from the sale of a home. These are incurred costs that go beyond the simple decoration of a home and entail substantial home improvements such as installing a new porch or patio, adding a new kitchen or bathroom, adding a fireplace, or landscaping. The costs of these home improvements are not subtracted from the proceeds of the sale of the home, but are instead added to the cost basis of the home. The larger your basis is in the home, the lower the profit will be upon the sale of the home, thus the lower the gain will be on the sale of the home.
When in doubt, remember that the IRS offers a deduction strictly for the cost of home staging when it is an advertising expense. It cannot be applied to personal renovations for the homeowner’s benefit.”
Always check with your personal CPA or Tax Advisor to confirm the details are still accurate and apply to your situation.
If you are thinking of selling your home and buying a new one this year I would love to assist in both and can assist in Staging as well. Starting sooner rather than later in planning and preparing your home for sale is highly encouraged. Give me a call and let’s start planning your sale asap. If you would like an estimate of your home’s current value I can get that together for you too.
You can reach me by email at email@example.com or firstname.lastname@example.org or by phone at 281-650-8162.
Information for this article are credited to http://claudiajacobsdesigns.com/tax-deductibility-of-home-staging-costs/ and also information furnished by Rob Unger to Claudia Jacobs and Barb Schwarz. IRS Publication 523 is also available from the IRS at irs.gov for further details.