Mold is important in the natural environment, helping break down dead organic material such as limbs or leaves, but it is a health hazard inside a house. It can cause problems breathing, such as hay fever or asthma, or irritate eyes and cause skin rashes. Mold spores grow in damp areas and can be difficult and expensive to remove; solving the problem can be tax-deductible in some circumstances.
Remediation vs. Renovation
Mold removal or remediation qualifies as a deductible expense from your income for federal taxes because the Internal Revenue Service considers it an essential repair required to maintain the value of your home. There's a distinction between repair and renovation. Repair maintains your home's value; renovation increases it. Removing mold keeps your house livable without improving it.
Deducting Labor and Materials
If you hire a professional company to remove mold, which is typically the case, you can deduct the total bill, including both materials and labor. You'll usually have to fill out a Form 4684 for casualty losses and then report the mold remediation expense on a Schedule A for itemized deductions with your basic Form 1040 income tax return.
You may be able to claim a portion of relocation expenses if the mold remediation forces you and your family to live elsewhere during the process. This is often the case with natural disasters such as hurricanes or storms. You should review your case with an IRS representative or income tax preparer before you contract for the work to find out if those expenses can be deducted.
No Deduction for Renovation
You can't deduct mold remediation if it's part of a major renovation. If mold is discovered and removed while you're building an addition, for instance, that expense is considered incidental to the improvement. However, if the renovation contributes to an increase in the value of your home, and if you are subject to a capital gains tax upon selling your home, you can write off the expenses of the renovation, including the mold remediation, against the capital gains and lower your tax obligation.
- Environmental Protection Agency: Mold Basics
- Internal Revenue Service: Casualty, Disaster, and Theft Losses
- Internal Revenue Service: FAQs for Disaster Victims
- Toxic Mold Foundation: Mold Remediation Is a Tax Deduction?
- RIS Media: Mold Remediation Gives You a Tax Deduction
- The IEQ Review: Mold Remediation Gives You A Tax Deduction
- Florida Mold Inspections: Mold Remediation Gives You a Tax Deduction
- Can You Claim a Girlfriend as a Dependent on Income Taxes?
- Tax Deductions for Investments Commissions
- What Does It Mean When You Claim Married?
- How to Use Form 1098-E for My Taxes
- What Deductions Can I Claim on My Income Tax for a House I Own?
- How to Avoid an Audit When You're Self-Employed
- Can I Claim Foster Kids on My Income?
- Can Prescriptions Paid With Taxed Dollars Be Deducted on Federal Taxes?
- How to Understand Straight-Line Depreciation
- 403(b) Tax Deduction Rules