Is Home Staging Tax-Deductible?

As the April 15 tax deadline approaches, Three Bears Home Staging wants to remind you that in many cases, the cost of home staging may be tax-deductible!

Are Home Staging Costs Tax-Deductible?

Here’s what Barb Schwarz, ASPM®, IASHP®, and The Creator of Home Staging® and CPA/CFE Rob Unger of the accounting firm Judelson, Giordano & Siegel, P.C. have this to say about using home staging as a tax deduction:

“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, the staging expenses are not tax deductible.”

More on How to Maximize Your Home Sale and Save on Taxes

Selling your home involves costs, but some of these expenses can actually help you save on taxes. When you stage your home for sale, some of the expenses you incur can reduce the capital gains taxes you’ll owe on the profit you make from the sale. Let’s take a look at how it works.

Advertising Expenses: Home Staging and Tax Benefits

As previously mentioned, many home staging costs qualify as advertising expenses according to the IRS. This includes the fees you pay to professional home stagers who work their magic to make your home look irresistible to potential buyers. When it’s tax time, you can subtract these staging fees from the sale proceeds. You can also subtract certain other sales expenses like real estate broker commissions and legal fees. This reduces the amount of taxable profit from the sale.

Capital Improvements: Enhancing Your Basis

If your home staging involves substantial improvements, like landscaping or adding a new fireplace, these might not qualify as advertising expenses. But don’t worry! You can still benefit from these improvements. Qualifying home improvements may increase the tax basis of your house. This, in turn, reduces your net taxable profit from the sale, and ultimately, your capital gains tax.

Determining Capital Improvements

What qualifies as a capital improvement? The IRS looks for improvements that are part of an overall remodeling project and provide lasting benefits beyond one year. These improvements should add value to your property, extend its lifespan, or adapt it to new uses. Examples of improvements that increase your basis include things like installing wall-to-wall carpeting, central air systems, or a new roof. IRS Publication 523, Selling Your Home provides a detailed list of qualifying improvements. Keep in mind that repairs and maintenance tasks don’t count as capital improvements. (e.g., fixing a leaky sink or repainting won’t give you any tax benefits.) If you’re planning extensive home staging work, be sure to itemize your expenses. This way, you can clearly distinguish between improvement costs and advertising expenses, like furniture rental.

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One note:  ALWAYS check with your own CPA or the IRS concerning all tax write-offs, tax information, and your specific home staging expenses to verify whether they are tax-deductible. Your own unique situation may be different, and tax laws change.

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Need Home Staging Help?

Are you selling a home this year? Need a little help figuring out how to get the quickest and most profitable sale? Get in touch with the home staging consultation specialists at Three Bears Home Staging!

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