Thinking about remodeling your home and wondering if it might come with any tax perks? Many homeowners in Philadelphia and wider Montgomery and Bucks Counties want to know: Are renovations tax-deductible in PA? This guide will walk through what you can and cannot deduct, what credits might be available now or in the future, and how to make the most of every dollar spent on home improvements.
What you can expect:
In most cases, renovations aren't directly tax-deductible in Pennsylvania. However, there are specific circumstances where they might impact your tax situation. It all depends on the type of improvement and its purpose.
Capital improvements are permanent upgrades that increase a home's value, extend its useful life, or adapt it to new uses. These types of improvements are not considered routine maintenance or repairs. They are strategic investments that can enhance the functionality, comfort, and resale potential of a property. Keeping track of these costs is essential for accurate tax reporting and can provide long-term financial benefits when selling the home.
What's a repair, what's an improvement, and what counts? It's important to check with tax professionals before writing anything off on your taxes. However, here is a list of common home improvements in Bucks and Montgomery Counties:
New roofing, siding, or windows
Adding a deck or garage
Installing central HVAC or a water filtration system
These upgrades don't result in an immediate deduction but can raise the home's cost basis, potentially reducing capital gains taxes when the home is sold. In order to benefit from future tax deductions, keep thorough records: estimates, invoices, photos, and any permits tied to the project.
Generally, no. However, if the repair relates to a rental property or a home office, or results from a casualty loss declared in a disaster area, there may be exceptions. Always check with a tax professional. No matter what, it's important to improve your home, and even repairs like exterior renovations can increase its value.
Home improvements in Philadelphia and the surrounding areas do not incur sales tax, but they can increase a home's assessed value. This might lead to higher property taxes over time. You should track spending on energy upgrades, accessibility modifications, and permanent value-adding features. These may help reduce capital gains taxes later.
Pennsylvania residents may qualify for state-level programs and incentives that reduce property-related tax burdens. There are different types of rebates or tax deductions. We go into them below.
Pennsylvania's Property Tax/Rent Rebate Program offers eligible homeowners up to $650 back, depending on income. Seniors age 65+, widows/widowers 50+, and people with disabilities may qualify.
For homeowners aging in place, the property tax rebate can ease the cost of accessibility-focused remodels, even if the remodel itself is not deductible. This is a great way for seniors to remodel their home and get a bit back in their taxes.
First-time buyers in Pennsylvania may qualify for mortgage interest deductions and potential savings on energy-efficient upgrades. Most Pennsylvania homeowners can deduct mortgage interest on their state and federal tax returns, making long-term financing for remodeling more affordable. If you're planning on buying an older home and remodeling it, this is a great option.
While we're not a new home builder, it's important to bring this up. New legislation coming in 2026 will offer expanded tax credits for energy-efficient new home construction. Homeowners may qualify for rebates for solar panels, insulation upgrades, and high-performance HVAC systems. The tax credits for building a new home can significantly reduce the cost of new construction, especially if the home meets federal energy standards. Although Pennsylvania does not currently offer many local credits, the federal incentives are growing.
Planning a remodel? Now is a smart time to include energy-efficient upgrades. Homeowners undertaking renovations are eligible for the Energy Efficient Home Improvement Credit, which applies to upgrades in existing homes. This includes improvements like high-efficiency HVAC systems, ENERGY STAR windows and doors, insulation, and more. The credit covers 30 percent of qualifying expenses, with limits per category, and is available through 2032.
This is distinct from the new construction credit, which is aimed at builders of qualifying energy-efficient homes. For homeowners in Philadelphia and the wider areas of Bucks and Montgomery Counties planning remodels, this credit offers a meaningful way to offset costs while boosting home performance.
Some credits have upcoming expiration dates. The Energy Efficient Home Improvement Credit is set to expire for property placed in service after December 31, 2025. Additionally, the New Energy Efficient Home Credit for newly built homes must be claimed by June 30, 2026. Acting now ensures you maximize savings while boosting your home’s comfort and value. It's worth checking out how long remodeling takes so that you can be prepared, especially during a time crunch.
Tax credits can be available now or in upcoming years for homeowners who focus on energy efficiency or accessibility. Unlike deductions, which reduce taxable income, tax credits reduce your actual tax bill dollar for dollar. This can make them especially valuable. Always check with your tax preparer to see what credits are available to you.
At Metzler Construction, we understand that the real value of a home is more than what appears on a tax form. Every renovation project is a chance to improve not just resale value but the quality of life inside. Whether it is a kitchen remodel, a whole house renovation, or creating a safer space for aging parents, we ensure the work is built to last and adds meaningful value. We're here with resources about how you can live at home while remodeling and a checklist for exterior remodels.
Homeowners across Montgomery and Bucks Counties choose our remodeling company because of our trusted reputation, clear process, and standout portfolio. The team begins each project with a personal consultation, listens carefully to client goals, and creates tailored solutions in collaboration with top design and architecture professionals. It's important to choose the right remodeling contractor, and that starts by knowing what each team can do.
Metzler Construction brings:
Experience across kitchens, bathrooms, whole home renovations, and more
Transparent project timelines and estimates
A digital client portal for easy communication and updates
Attention to detail that reflects care and craftsmanship
You can explore recent work, read reviews, or learn about pricing by visiting the website or accessing our cost guide.
Contact us today to learn more about remodeling and to schedule a consultation.