Accounting

Tax credits or deductions for home improvement

Published

4 months ago

November 11, 2024

Financial advisors and tax professionals whose clients are repairing or renovating their home or another real estate property can help them unlock some savings in the process.

The many available strategies for tax savings tied to home improvement begin with the question of whether the client is working on their personal residence, a house or apartment where they live but also operate their own business, or a property that they have invested in as a real estate endeavor, according to certified public accountant Miklos Ringbauer of Los Angeles-based MiklosCPA. And they revolve around regular meetings with clients discussing any plans they have for upgrades and exploring potential tax strategies, he said in an interview.

“That’s exactly where the true value of a financial advisor or a tax professional comes in to proactively support the taxpayer,” Ringbauer said.

For a personal home, the clients may not know that their home repair could bring savings through the federal energy efficient home improvement credit and the residential clean energy credit. While the rules for each place restrictions on how much and what type of expenses are eligible, more than 3.4 million families received $8.4 billion in federal tax credits last year on top of reducing their energy bills and qualifying for many state-level credits available to them.

“Sometimes state incentives are much more than the federal government’s,” Ringbauer said, citing the tax advantages for California taxpayers tied to widespread droughts in the state a couple of years ago. “The local governments and the state encouraged the taxpayers to create these drought-resistent environments, and they gave a lot of financial support.”

Even though many basic home improvements such as fixing a leak, painting a bedroom or replacing a broken window pane won’t typically be eligible for tax savings, the clients may be forgetting that installing a ramp, rails or a pool, widening doors for a wheelchair or redoing a bathroom could draw deductions as a medical expense.

“Many taxpayers don’t think about this,” Ringbauer said. “If it increases the value of the home, then you may not be able to take the deduction, but the good news is that it increases your basis.”

For clients who run businesses out of their homes, that window replacement for their office area or the creation of an addition to their house to accommodate their company may deliver some itemized savings. In addition, the interest cost of their mortgage, refinancing or home equity line of credit could garner deductions.

“If I needed extra capital, I have the ability to take a deduction on that mortgage payment,” Ringbauer said. “It’s incredibly valuable to reduce my self-employment business income.”

When it comes to real estate investments, the forms claiming home-improvement deductions and credits on a state or federal level “are not easy to fill out,” and, “doing things in the wrong bucket or putting it on the wrong line can cost you thousands of dollars,” he pointed out. However, they come in very handy in the sale or generational transfer of a property.

The biggest capital investments into the property, such as a roof replacement or the installation of a new bathroom, could result in tax advantages for the owner as well, through so-called cost segregation methods that break up the structure into various components depreciating on different schedules, Ringbauer noted. That may make the financing much more feasible.

“I have positive cash flow, but for tax purposes, I wiped out my income in the process. And then even throwing a tax credit on top of it can be significantly beneficial for a real estate investor,” he said, noting that there is a distinction for the IRS and other agencies between the large capital projects and standard repairs such as fixing a door. “It’s very important, and that’s where many taxpayers, especially if they are self-preparing returns, run into challenges.”

Accounting

Wolters Kluwer CEO Nancy McKinstry to retire in 2026

Published

3 minutes ago

February 27, 2025

Business Finance News

Wolters Kluwer announced that its CEO, Nancy McKinstry, will be retiring next year. Her official retirement date is February 2026, at which point it is intended that Stacey Caywood, current CEO of Wolters Kluwer Health, will take over as chief executive.

McKinstry is a longtime veteran of Wolters Kluwer, having served numerous leadership positions with the firm even prior to becoming CEO, first coming into the company in the 90s. She has been CEO of the company’s operations in North America; President and CEO of Legal Information Services (currently part of Wolters Kluwer’s Governance, Risk & Compliance division); and product management positions with CCH Inc., now part of Wolters Kluwer Tax & Accounting. She has also been a member of the Executive Board since June 1, 2001.

She became CEO in 2003 and has maintained the position since then.

The Supervisory Board plans to nominate Caywood, the intended successor, as a member of the Executive Board during its May 15, 2025 Annual General Meeting of Shareholders. After appointment by Wolters Kluwer’s shareholders at the Annual General Meeting on May 15, 2025, the Executive Board of Wolters Kluwer N.V. will consist of McKinstry (CEO, until February 2026), Kevin Entricken (CFO) and Caywood. The plan is that Caywood will then be appointed CEO of Wolters Kluwer once McKinstry officially retires in February. 2026.

McKinsky said she was grateful for the chance to lead Wolters Kluwer through decades worth of changes, and expressed confidence in her intended successor.

“It has been an honor and privilege to lead Wolters Kluwer through decades of transformation as the market has evolved, and I am committed to ensuring the company’s continued strength and relevance,” said McKinstry. “I am deeply grateful to the Board and my past and present colleagues for their support throughout my tenure. We have a strong foundation in place and, with Stacey, an extraordinarily talented and experienced successor. Stacey’s track record as a leader, her customer-focused approach, and her deep knowledge of our company gives me full confidence that Wolters Kluwer will be in excellent hands under her leadership. I am dedicated to ensuring a seamless transition over the next year.”

The intended new CEO, Caywood, specializes in business transformation, digital revenue growth, and innovation across legal, compliance, and healthcare markets. Her expertise spans strategy execution, portfolio management and M&A, product innovation, and commercial excellence. She has led Wolters Kluwer Health since 2020, where she led the further evolution and development of Wolters Kluwer’s healthcare solutions. Prior to that, as CEO of Wolters Kluwer Legal & Regulatory, she led a strategic transformation across Europe and the U.S., returning the business to organic growth.

“We are delighted to nominate Stacey Caywood as Wolters Kluwer CEO, effective February 2026,” said Ann Ziegler, Chair of the Wolters Kluwer Supervisory Board. “Stacey’s successful track record leading two of our largest divisions, her deep understanding of our business, and her active role in developing the group’s 2025-2027 strategic plan make her the ideal candidate to lead the company into the future. For over thirty years, Stacey has held various leadership roles within the company, and we have full confidence in her ability to continue Wolters Kluwer’s legacy of sustainable value creation through excellence and innovation. We look forward to working closely with Stacey and supporting her in this new role.”

Accounting

PCAOB quizzes auditors on new confirmation standard

Published

1 hour ago

February 27, 2025

Business Finance News

The Public Company Accounting Oversight Board posted a new “knowledge check” to help auditors gauge their understanding of the new confirmation standard.

AS 2310, The Auditor’s Use of Confirmation, and Other Amendments to PCAOB, replaces an interim standard, AS 2310, The Confirmation Process, and is effective for audits of financial statements for fiscal years ending on or after June 15, 2025. The results of the knowledge checks are anonymous, and the PCAOB staff will not publicize results or use them in its oversight activities.

This knowledge check is the latest in a series of resources, including staff presentations, to help auditors prepare for implementation. Earlier this month, the PCAOB posted another knowledge check on its new quality control standard, QC 1000, A Firm’s System of Quality Control.

More implementation resources on AS 2310 and other PCAOB standards and rules can be found at the Implementation Resources for PCAOB Standards and Rules page. Auditors with questions can contact PCAOB staff via its contact form or by phone at (202) 591-4395.

Accounting

IASB updates IFRS for SMEs Accounting Standard

Published

2 hours ago

February 27, 2025

Business Finance News

The International Accounting Standards Board issued an update Thursday to the International Financial Reporting Standard for Small and Medium-sized Entities Accounting Standard which aims to balance the needs of leaders and users of SMEs’ financial statements with resources available to SMEs.

The standard, currently required or permitted in 85 jurisdictions, defines SMEs as entities without public accountability that prepare general purpose financial statements.

A result of a periodic and comprehensive review of the standard, the update includes:

a revised model for revenue recognition;
bringing together the requirements for fair value measurement in a single location; and,
updating the requirements for business combinations, consolidations and financial instruments.

“The update to the IFRS for SMEs Accounting Standard will improve the information provided to users of SMEs’ financial statements while maintaining the simplicity of the standard,” said IASB chair Andreas Barckow in a statement.

This update is effective for annual periods beginning on or after Jan. 1, 2027, with early application permitted.