Energy Efficiency Tax Deduction
- Though dishwashers used to be eligible for a tax benefit, they were not eligible for the energy efficiency tax credit as of the date of this article's publication. This credit has changed from year to year and has covered the costs or a portion of the costs for certain energy efficient appliances like heating, ventilating and air conditioning units or geothermal heat pumps. The credit is typically structured as a tax credit equal to a percentage of the cost (usually 30 percent) up to a stated limit.
- Though not a direct deduction, a new dishwasher will save you money on your taxes when you sell your home. Home improvements are added to the amount that you paid for your home and together is your basis in your home. The basis is subtracted from the amount for which you sell your home and you are taxed on that difference -- the income earned from the sale of your house. This becomes extremely important if the income made on the sale of your house exceeds the maximum exclusion amount, which allows you to exclude up to $250,000 of the gain from the sale of your house in 2011.
- If you run a business from your home and your dishwasher is exclusively used for that business purpose, you may be able to take a deduction as an ordinary and necessary business expense. If, however, you use the dishwasher for personal use, it will be very difficult to justify this as a business expense. If the dishwasher is considered a business asset or start-up cost, you may need to capitalize, rather than deduct, the cost of the dishwasher.
How to Claim
- For home improvements to increase the basis of your house, the Internal Revenue Service suggests keeping a log of improvements with their costs. In addition to the log, you should keep receipts in case the IRS questions the basis of your home the year in which you sell it. Depending on whether you are able to claim a deduction or if you are required to capitalize the dishwasher expense, it will be reflected differently on your tax return or your company's tax return.