by 
The Curious Bag
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According to the Internal Revenue Service (IRS), a home improvement is a project that adds additional value to your home, such as a new pool, new windows or even an add-on room.
Loan Interest
If you take out a loan to pay for home improvements, the interest on the first $500,000 is tax deductible. If you are married and file a joint return, the interest on the first $1 million is deductible.
Medical Purposes
If the purpose of the home improvement is for medical reasons, you can include the costs as a medical expense on your taxes. Medical expenses that exceed 7.5 percent of your adjusted gross income can be deducted.
Selling Your Home
When you sell your home, the gains taxes you pay depend on the increase in the value of the home. When you pay for home improvements, you increase your tax basis in the home so your taxable gain on the sale of the home is lower.
Energy Saving Tax Credits
If you install energy-efficient items like doors, windows and heaters, you can claim a tax credit of 30 percent of the cost of purchasing and installing the items, up to $1,500.
Misconceptions
Not all work that you do on your home counts as a home improvement. General maintenance or replacing older or worn out items like pipes or heaters count as home repairs, which do not qualify for home improvement tax deductions.
Source:
Home Improvement Depot: Home Improvement Tax Deductions
Business Tax Recovery: Tax Deductions for Home Improvements
Energy Star: Federal Tax Credits for Consumer Energy Efficiency
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