Real estate stagers help prepare your house for sale to attract as many potential buyers as possible. And since we are seeing an increase in the number of home sales and stagings in some Chicagoland markets, the question of deducting home staging costs has been popping up.
After Google-izing the topic, these general rules seem to apply:
• According to IRS guidelines, a professional home stager’s service fees (considered an advertising cost) can be subtracted from the realized profit on the sale of either a primary or secondary home provided that the stager was hired for the sole purpose of selling the house.
• In addition to retaining the paid invoice for the stager’s services, it is a good idea to have your home listed and marketed by your realtor as “professionally staged”. This is just one more way to justify the deduction.
• No matter how many DIY shows you’ve watched on HGTV, staging done by you (the homeowner) is not a deductible expense. Whether or not the cost of a home staging consultation alone is deductible is unclear.
• Remember that expenses incurred to repair and maintain your home, even if done in preparation to sell, are not deductible expenses according to the Internal Revenue Service. So, while it would be nice to deduct them, fresh paint, new window treatments, carpet and other home decorations are not tax deductible (even if recommended by a professional home stager).
• With a few exceptions, only a home stager’s service fees are deductible. Items purchased for staging and then kept for personal use are NOT deductible. However, items that are rented for staging (i.e furniture, art, accessories from a stager or other source) and then returned are deductible if not rented for personal use. This would specifically apply if you are staging a vacant property but might be more difficult to justify if the home is occupied while “staged”.
• One very important reminder about home staging deductions, if the house is staged and then taken off the market, the staging expenses are NOT tax deductible even if the home is re-listed. Only staging costs incurred with the second listing would be eligible deductions at that point.
All of this information and more is readily available online and in IRS Publication 523 “Selling Your Home”. Since I’m not a tax preparer, and since the IRS loves to change the rules on a whim, please check with your accountant or other tax professional to make sure you correctly take advantage of any and all current deductions that may be coming to you.