Home Staging Tax Deduction

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Good news for Realtors and homesellers, in a recent article Are Home Staging Costs Tax Deductable that was posted in the Times Herald-Record it outlines how IRS Publication #523 Selling Your Home explains how home staging can become a tax deduction.

Rob Unger, CPA, CFE of Judelson, Giordano & Siegel, CPA, P.C. states that “Home sellers can benefit from home staging, as the fees for staging services can be considered an advertising cost 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 the 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’ 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.”

Unger further clarifies home staging tax deduction by stating, “The IRS does not allow you to deduct expenses for repairs, maintenance and upkeep on your main home, so these expenses cannot be subtracted from the sale of your home. Fresh paint, new carpet, furniture and home decorations are not tax-deductible expenses, even if a home stager recommends them”.

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“In your example of the home being on the market, coming off, then going back on and selling, they are considered separate transactions. If there are staging costs associated with the first time it is on the market and then comes off with no sale, no deductions are allowed for the staging costs. Any staging costs associated with the property going back on the market and selling are deductible as it relates to that transaction.

“Staging is typically what happens after the homeowner has cleaned, painted and made minor repairs. It’s the cost of the stager’s services in dressing up the home to get it ready for sale.

“I think a literal explanation is that the tax-deductible part is what is on your invoice as the stager. Items that the homeowner buys and intends to keep that are used in the staging process are not deductible, as they are being used for staging and then also for personal use after the staging making them non-deductible. Items they rent for the staging process and then return after the home sells are deductible as part of the staging, as they do not use them for any personal use, they are used strictly for the staging process.”

“The staging costs must be related to the sale of a home and are deducted as selling expenses. If certain conditions are met, a single taxpayer can exclude up to $250,000 of gain, and a joint filer can exclude up to $500,000 of gain,” says Unger.

home staging tax deduction

A fair estimate to stage a vacant propert is approximately 1% of the selling price. That would include staging fees as well as furniture and accessory rental fees for a 3-month time period (less time on market equals less rental fees) and delivery fees. Factors that influence home staging fees are size of house/number of rooms to be staged and amount of furniture/accessories needed. By eliminating non-essential rooms from the staging plan (bedrooms other than master) and/or using less furniture/accessories per room bring home staging fees down.  

Please make sure to share this information with somone who is selling a home and needs home staging help.

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