Staging costs are subtracted from home sales profits and decrease total realized profit. In short, the IRS position is that prep costs are a legitimate selling expense for primary and secondary housing and are therefore tax-deductible. The basic answer is yes. The homepreparation costs that you, as a landlord, incur to sell your home will reduce the capital gains taxes you will have to pay on the profits made from the sale.
These expenses can reduce capital gains taxes in two different ways. We just came across this very insightful article on the topic of home staging expenses and tax deduction. In addition to the obvious benefits of home staging, better online impressions, and making it easier for potential customers to view the full possibilities of the house, preparation costs are tax-deductible. Home Stagers charges, including furniture rental, art rental, and other specifically incurred costs, are fully permissible as statutory deductions for advertising.
However, any renovation or redecoration work that is not part of the preparation plan is not tax-deductible at all. According to Unger, “Home sellers can benefit from housing staging, as fees for preparation services can be considered advertising costs, according to IRS guidelines. The cost of cleaning a home to make it attractive to prospective buyers is not deductible from the profits received from its sale. Home staging requires hanging and rearranging items, and as such, the person doing the assembly at home can use nails, screws, picture hangers, hammers, staple guns, and small power or cordless tools in their daily prep work.
However, when these customers discover that the cost of the staging is a tax deduction, they often wonder if it's possible that's true. For years, I've been telling clients, real estate agents, and those attending my prep classes that staging is tax-deductible. However, it's important to note that if a home is staged and then removed from the market, staging expenses are not tax-deductible. Housekeeper works in other environments, requiring travel to clients' homes, trips to pick up supplies, select fabrics, and entertain customers during lunch.
Home staging is actually real estate marketing and, as such, is tax-deductible for virtually every property owner. This means that when you hire a professional preparer for prep services and furniture rental, these costs reduce the benefit of the transaction and you may have less tax liability. If you hire a home prep manager to do or organize such extensive work, ask them to detail the bill they receive so that it separately shows the expenses for improvements and services (such as furniture rental) that qualify as advertising expenses. The only home sale expenses you can deduct are those that do not physically affect the property, such as real estate agent commissions and various other charges involved in the sale, such as escrow fees, liquidation costs, attorney's fees, etc.
Any license that the person in charge of the household must obtain to conduct their business is tax-deductible, as are fees for professional affiliation, group fees, education, tax preparation, attorney's fees, home office rent or mortgage, qualified mortgage interest, tax head office property, utilities, postage, estate agent fees, and advertising. .