Staging Expenses are Tax Deductible.

Home Staging Tax Benefit

Most people have heard of staging as a tool to help sell their home. Staging improves how potential buyers perceive the home. Staged homes usually sell faster and for more money than un-staged home.  Another valuable consideration in choosing to stage your home is that the expense is tax deductible.

I am not a CPA, so you need to talk to your tax accountant to see how and if this applies to you, however according to IRS publication 523 expenses related to home staging can reduce your capital gains taxes in either of two ways. The IRS allows deducting advertising expenses from the proceeds of the sale of a house. Since the work a home stager performs is to help market your home, the IRS considers these fees an advertising expenses. Just like Realtor commissions, escrow and legal fees, you deduct these expenses from the proceeds of the sale. This reduces the amount of taxable profit you earn from the sale of your home.

Again, it is very important to speak with a tax professional because some types of home staging may not qualify as an advertising expense. If a home stager recommends and executes a larger home improvement like updating a kitchen or adding a new deck, this is the second way to lessen your tax burden. Unlike the advertising expense, these are not deductions. These expenses are added to your basis, which increases the expense deducted from the proceeds, which determines your net taxable profit from the sale.  

Whether home staging fee is an advertising expense that reduces your net sales profit, or a home improvement that increases your basis to subtract from your sales proceeds you benefit from a tax saving.  Please remember to check with your tax professional to make sure that you are following the tax laws correctly.