Home Upgrades and Your Taxes: What You Need to Know 

Vibrant Living
Home Upgrades and Your Taxes: What You Need to Know

Now that the New Year has arrived, we’re all looking for ways to make improvements in our lives, from getting fit to reexamining our finances to remodeling that horrid 1970s-style bathroom. If you’re planning to make any improvements to your home this year, here are some things you need to know about home upgrades and their tax implications.*

Vibrant Living

Repair vs. Improvement: What’s the Difference?

In order to take advantage of tax breaks associated with home renovations, it’s important to know the difference between a repair and an improvement. The IRS defines a repair as anything that’s necessary to keep your home in good condition but doesn’t necessarily add to its value. An improvement is anything that prolongs the useful life of your home and has the potential to increase its resale value. If you want to take advantage of the available tax perks, your project needs to fall under the home improvement category. You can learn more about the difference between repairs and improvements on IRS Publication 523 or by reaching out to your tax advisor.

Tax Breaks for Home Improvements

So, if your project qualifies as a home improvement, does that automatically mean it’s tax deductible? Not necessarily. In fact, home improvements are generally not tax deductible. However, there are some exceptions and other kinds of tax breaks that may apply to you, including:

When You Sell: If your home increases in value (whether through appreciation or upgrades) and you turn a profit when you sell, that profit — known as capital gains — will be taxed. However, you can reduce the amount of capital gains taxes you owe by increasing your adjusted cost basis. Your cost basis is what you paid for the home, plus costs incurred (including home improvements). A higher adjusted cost basis means a lower capital gains tax, so be sure to keep receipts and paperwork from home improvements you make to increase your adjusted cost basis when you’re ready to sell.
Solar Energy Upgrades: While the tax credits for most energy efficiency upgrades expired in 2016, you can still claim a tax credit for solar water heaters and solar panels through 2021. Currently, the tax credit is 30% of the cost, including installation. The credit decreases to 26% for tax year 2020 and drops again to 22% for tax year 2021. So, if you plan to make solar upgrades, do so sooner rather than later to claim the higher tax credit. Visit energystar.gov for requirements and more information.
Medically Necessary Modifications: Renovations that are made to accommodate a medical disability can typically be deducted on your taxes. Examples include adding a wheelchair ramp, widening doorways, adding handrails or support bars, and installing lifts. There are some limitations, and you must itemize deductions instead of claiming the standard deduction, so be sure to talk to your tax advisor first. You can also check out IRS Publication 502for further details.

Whether you’d like to increase your home’s resale value or simply want to improve your living space, home renovations can be a valuable investment. Just be sure to keep the above information in mind before starting any project in order to maximize your tax savings.


Seattle Times – Best Photo of the Year

UW cherry blossoms photo is a winner

The top 10 reader photos we received this year include a unique view of University of Washington cherry blossoms in the rain; the gentle love of a goose for its gosling and the visual poetry of autumn leaves swirling in a stream.

In many arenas, 2017 has shown there are always new ways of looking at things. Cameras prove that all the time, whether they’re pricey SLRs or run-of-the-mill smartphones.

Among top images from our readers in 2017 were this unique view of University of Washington cherry blossoms in the rain, or photos showing the gentle love of a goose for its gosling, or the visual poetry of autumn leaves swirling in a stream.

Over the past year, Seattle Times readers submitted hundreds of such images to our Reader’s Lens feature.


This photo is so rich. I love the depth that is a result of very effective lighting. Setting up three off-camera strobes in the dark and in the rain and getting the perfect angle on all the elements was no small feat. I admire this photographer for his tenacity, thoughtfulness and creativity. Everything in this image really “pops,” with so many parts for the eye to take in. The backlit subjects, illuminated trees, shiny raindrops and reflections on the pathway create so many layers. The low angle gives the photo impact it wouldn’t have otherwise by highlighting the raindrops and umbrellas. A successful photographer must have an aptitude for detail and the ability to see how all aspects of the image fit together in an aesthetically pleasing way. Well done, Mr. Nakamura!

— Angela Gottschalk, Seattle Times photo editor

At year’s end, we’ve chosen 10 favorites to be our Seattle Times Reader Photos of the Year — a grand-prize winner and nine honorable mentions.

The grand prize, a $250 gift card to Kenmore Camera, goes to Yoshiki Nakamura, of Seattle. In his image (above) of nighttime visitors to the UW’s grove of cherry trees, streaking raindrops add texture and depth to an iconic Seattle setting we’ve not seen photographed this way before. (See related story to learn more about the photo and the photographer.)

A $25 Starbucks gift card goes to Honorable Mention winners in three categories: Northwest Flora and Fauna (see the winning photos here), Northwest Fun and Adventure (see the winning photos here), and Northwest Scenics (see the winning photos here).

Judging was by Angela Gottschalk, Seattle Times photo editor; Times photo specialist Colin Diltz, and Brian J. Cantwell, Seattle Times travel & outdoors editor. Photo specialist Katie G. Cotterill assisted in selection.

Thanks to all who sent in so many images of Northwest life and living. Please keep sharing your recent photos from the region at seattletimes.com/submit-photos.

Seattle rents now rank among top 5 most expensive in U.S.; Tacoma joins $1,000 club

If you need a reason to buy now vs. later and are tired of throwing your money down the drain in rent…. give me a call.  Read this though!

The median is the midway point. Half the renters pay more, and half the renters pay less.

It’s certainly no surprise to anyone who’s at the whim of the local rental market, and that’s a lot of people. The data show about 331,000 people living in rental units in Seattle last year, a jump of close to 60,000 since the start of this decade.


Back in 2014 — a mere three years ago — I wrote about Seattle making its debut among the top 10 most-expensive rental cities. It seemed like big news at the time, but as it turns out, we were just warming up.

Since then, Seattle has climbed its way past Los Angeles, Virginia Beach, Honolulu, and even New York City, which we toppled in 2015.

Then, last year, we leapfrogged Washington, D.C., into the No. 5 spot among the 50 biggest cities in the country.

As for next year? Look out, Boston, we’re right there in your rearview mirror.

The biggest rent increase — $162 — was in San Jose, Calif., which also has the highest median of any major city. Portland saw its median go up by more than $100 for the first time, ranking the Rose City fifth for rent increases last year. Even at $1,153, it’s significantly cheaper than Seattle.


Some of the dollar amounts for median rent in the census data might sound strangely low. For example, the median for San Francisco is less than $1,800, but good luck trying to find a place for that amount in the City by the Bay.

The reason is that census numbers are not based on the present market rate, like many rental estimates you’ll see. Rather, the Census Bureau surveys people who are renting, and asks them what they pay.

People living in market-rate apartments are counted, of course, but so are folks in older and less-expensive units, as well as those in subsidized housing who may pay little or no rent at all. Many renters who have been living in their apartment for a long time pay far less than market rate.

And in San Francisco and New York, a significant number of units are rent-controlled and rent-stabilized, further bringing down the medians in those two cities.

Census figures also includes the estimated average monthly cost of utilities, if these are paid by the renter. This is intended to eliminate differences that result from varying practices — in one apartment building, some or all utilities may be included in the rent, while at the next building, the tenants might be on the hook for everything.

As tough as things are in Seattle, consider the poor folks renting in Bellevue. The median there jumped by a whopping $153 last year, hitting $1,846.

Bellevue is the extreme, but the census data show that all cities in our metro area are getting more expensive. And for the first time, Tacoma joined the $1,000 club — the median rent now is $1,054.

Looking for an escape from Seattle’s soaring housing costs? If you want flat rents — and are OK with flat everything — the cheapest big city in the U.S., with a median rent of $762, is Wichita, Kan.

Gene Balk: gbalk@seattletimes.com On Twitter @genebalk

The city that solved homelessness


by Joe Copeland – 

Construction is everywhere. The economy is booming. And yet Seattle’s homeless problem continues to grow. If we can’t even make progress in good times, the odds would seem to be against real solutions.

But there is one city that seems to have it figured out: Vienna.

European cities, in general, do much better that North America in providing housing. The Austrian capital, though, has had unusual success with housing issues that dog metro areas in the Pacific Northwest.

Vienna offers a vision of a city that doesn’t shove long-time residents to neighboring communities, accommodates a range of incomes, and actually has enough affordable housing that the homeless problem is solved.

The Austrian capital’s model has attracted attention in Asia, other parts of the U.S. and Vancouver, British Columbia, where political leaders have declared a homelessness crisis. Recently, a Museum of Vancouver exhibit, “The Vienna Model: Housing for the 21st Century City,” has provoked considerable attention.

In terms of people living on the streets, there’s just “no comparison, no comparison” at all between European cities in general and the U.S. or even Canada, says William Menking, the New York-based co-editor of a book, “The Vienna Model,” on which the exhibit is based. He’s in Berlin currently, where on a recent day in a working-class neighborhood he didn’t see a single homeless person.

Here are just a few of the many issues that Vienna has figured out: Mixing ethnic, age and income groups. Protecting open space. Aging in place. Transit-centered development. Building new train lines to the hinterlands before suburban housing developments are built.

These successes cut across the range of social, transportation and sustainability issues that Seattle knows it should tackle.

Some of Vienna’s housing uses the high-rise, easy-to-construct styles that generally flopped — often so spectacularly that whole buildings were demolished — in America’s public housing. Austria, like America, has a history of discrimination (Hitler spent considerable time there) and ethnic tensions; it approached its big housing projects with an eye toward creating a functioning society.


Even before World War II, Vienna was working at bringing people together in attractive housing projects, not warehousing the needy and the working class. Architects sought to create a “garden city” for workers with an early low-rise complex, George-Washington-Hof. In the 1960s, a large, 11-story complex of prefabricated elements plopped in place by cranes was redeemed by individual units that were laid out to allow ample natural light, and by buildings placed in such a way that they create a park-like setting. By the mid-’70s, a complex with 20-plus story buildings — called Wohnpark (Residential Park) Alt-Erlaa — was being built for 7,000 people with spacious gardens, rooftop pools, saunas, preschools and more — a concept the exhibit organizers call “luxury for all.”

More recent innovations tend to use somewhat lower-rise buildings juxtaposed with a variety of walkways, recreational facilities, residence balconies and green space — all accomplished while creating enough density to support transit.

One recent housing project used generally low-rise construction and flexible floor plans to ensure that residents could have options as they aged to shrink their space or share their units with others — and the rooftop gardens are wheelchair accessible.

Those rooftop gardens, common in Vienna’s housing for people of all incomes, are starting to pop up in a few new developments here — for those who can afford the steep-even-for-Seattle rents.

Vienna certainly has advantages: The federal government covers more than half of the roughly $700 million a year spent there on “social housing,” the subsidized units that house about 60 percent of the city’s population. These dwellings have some sort of subsidy for construction or operation, a concept that’s very different from the public housing practices in this country that give a small percentage of people a break but come nowhere near making rents broadly affordable.

The city also owns a lot of land where it can develop the housing complexes (at least one Viennese architect advises never selling public land). And it uses its advantages smartly: Menking says that the practice of awarding housing projects to nonprofits encourages collaborations with architects, and quality counts in making awards. The result: housing that incorporates — and creates — the best of urban life.


Sargfabrik includes a kindergarten, restaurant, library and rehearsal room. Credit: Miriam Kittel

As Sharon Lee of Seattle’s Low Income Housing Institute notes, about 100,000 households here are paying more than 30 percent of their income for housing, many of them forking out more than 50 percent. Seattle could benefit from 60,000 more affordable units, she says — not the 50,000 total new units, most at market rate, that the mayor hopes to see built.

Vienna’s tradition is vastly different than ours; it’s supported by people who are willing to pay taxes for housing, health care and transit. There’s no prospect at the moment that national politics in the United States will lead to the kind of federal support that would make a huge difference in housing affordability.

But Seattle’s voters have acted almost European in approving taxes for transit and housing. Although the city turns the Vienna model of mixing incomes upside down by allowing developers to fund affordable housing elsewhere rather than including it in their own buildings, it does have some experience in making use of the nonprofit sector along Austrian lines.

LIHI’s Lee points out that, beyond Seattle’s longstanding housing levy, there’s a new factor. Councilmembers Kshama Sawant and Lisa Herbold managed to insert $29 million in housing bonds into the city budget for this year. Lee thinks the idea could tap into the kind of spirit that energized Seattle’s campaign for a $15 per hour minimum wage.

Jonathan Rosenblum, the author of a book about that campaign called “Beyond $15,” has been writing about the need for “a massive public housing program” in Seattle. His idea for financing it would be a local version of an income tax. That likely raises issues with the state constitution, which courts have interpreted as barring any income tax unless it were a flat rate. But where there’s a will, there may be a way to tackle at least part of the need.

It’s not something that will happen overnight. But perhaps we can take some small consolation — confidence — in knowing that Vienna’s emphasis on affordable residences dates from a housing crisis a century ago.

This series is made possible with support from Comcast. The views and opinions expressed in the media, articles, or comments on this article are those of the authors and do not reflect or represent the views and opinions held by Comcast.


5 questions to help you plan for buying a home:

Planning to Buy? Got a Plan for What Comes After?


5 questions help you look ahead to home ownership.


Buying a home comes with a huge financial stake, a lot of responsibility, and even more fine print. While investing in this aspect of the American dream is exciting, it’s important to reflect on your current and future plans before buying. Here are five questions to consider:

1. What Are Your Goals for the Next 5 to 7 Years?

Are you happy with your job and feeling content with how your life is going? Do you anticipate any career, family, or financial changes in the next few years?

If you’re considering growing your family or changing careers, factor into your budget any anticipated changes, such as extra room for a baby or an income cut. That’s better than taking a financial loss by having to turn around and sell your new property.

2. What Will It Cost to Both Purchase and Own Your New Property?

A general rule of thumb is to keep your PITI (principal, interest, taxes, and insurance) costs below 28% of your gross monthly income, while your overall debt-to-income ratio should be no more than 36%.

Are you buying a bigger space than what you currently have? Don’t forget to factor in increased heating and cooling costs. Also, plan for homeowner’s association dues if applicable.

In addition to the funds you have for your down payment, don’t overlook the following expenses you’ll incur once you purchase your home:

  • Moving costs
  • Closing costs
  • Home repairs
  • Painting
  • New appliances
  • Fixtures
  • Furniture

I recommend opening a separate savings account in addition to your down payment fund to save for these expenses.

3. What’s Your Credit Score?

Your credit score is your financial report card, except it will follow you long after college. This number can either save or cost you thousands of dollars when it comes to locking in an interest rate on your mortgage. The lower your score, the higher your interest rate and the more you’ll pay to borrow from a lender. The higher your credit score, the lower your interest and the more money you’ll keep in your pocket.

If you have any issues on your credit report, tackle them as soon as possible.

4. How Will You Handle Home Repairs and Maintenance?

Is there a lawn to mow or a pool to clean? Do you enjoy the idea of tinkering with appliances and fixing things around the house? Consider if you’ll DIY or delegate. If you’re a delegator, price services ahead of time to ensure there’s room in your budget.

One of the first things I told my husband upon seeing our new backyard was that I don’t do landscaping. Apparently, neither does he, because 12 months in, we have a monthly line item in our budget for a gardener.

5. How Will Your Ideal Location Affect Your Monthly Nut?

It’s important to consider more than just the home price in your desired community. Will you be farther from or closer to work? How will your home’s location affect your commuting costs? Our family purchased in a community that has a toll road, so we’ve added tolls to the monthly budget.

In addition to transportation costs, consider whether your food and utility costs will increase or decrease, and whether you’ll enroll kids in the local school district or opt for private schooling.

Seattle sphere craze continues with giant dome planned atop skyscraper

A new residential tower planned at 3rd and Virginia in Seattle would include a giant sphere that tops out at 499 feet above the street, according to plans developer Westbank submitted to the city. 

A new residential tower planned at 3rd and Virginia in Seattle would include a giant sphere that tops out at 499 feet above the street, according to plans developer Westbank submitted to the city. (Courtesy of Westbank development)

The project just unveiled at Third Avenue and Virginia Street in Seattle’s Belltown neighborhood features a dome that, at its peak, would sit nearly 500 feet above the street.


Seattle millennials think that to buy a starter condominium they would need $41,720 for the standard down payment of 20 percent….

From Marc Stiles and the Puget Sound Business Journal: 

“A new report by a company called Apartment List found that Seattle millennials think that to buy a starter condominium they would need $41,720 for the standard down payment of 20 percent. In reality, they would need nearly $61,400 for the down payment on a condo in the Puget Sound region, where the median price is $306,900.”

Leah Zamir  with Guild Mortgage in Seattle says, “Let me be clear…this is simply not true.  You do not need $61,400 to purchase a condo.  Now, if you’re trying to avoid paying mortgage insurance, sure, you would need $61,400 + another $6,000 or so for closing costs and prepaid taxes/homeowners insurance to hit that magical 20% equity mark where you don’t have to pay mortgage insurance.  However, there are loan programs offered through Washington State that offer down payment assistance to borrowers covering ALL of a borrowers down payment, leaving millennials only needing enough money to cover closing costs (and even then, those can be covered by the seller if the buyer is lucky).  So now we’re left with whether or not it’s prudent to save enough to get out of mortgage insurance, or buy the house/condo sooner, but pay mortgage insurance.  Well, let me just insert a slide from one of my home buyer classes here:

In the end, Marc isn’t incorrect in his calculations; I just wish the amazing loan programs that allow buyers to get into homes sooner than they might think, and therefore allow them to take advantage of our incredible real estate market were more widely known. ”

Please, if you or someone you know would like to own a home but doesn’t think they A) Have enough for down payment, or B) Their credit isn’t good enough, or C) Their income isn’t high enough – Please have them contact me and I will send you to a few lenders to explain this in more detail. There are great programs out there guys!

To read the full article by Marc Stiles:  http://www.bizjournals.com/seattle/news/2017/05/26/seattle-millennials-want-to-buy-house.html