Are Home Inspections Tax Deductible?

Typically, a home inspection fee is not a deductible expense for the average homebuyer. There are a few instances where a home inspection cost would be deductible though:

Your Home Inspection fee may be deductible if you are purchasing the home as a rental property or investment. If you plan on buying the home and turning it into an income property, then the inspection may be deducted as a business expense. You should also ask your individual tax preparer to verify if this is correct for the way your business is structured. If you have lost your inspection invoice or reciept, just contact us and we’re happy to provide one for you.

The other situation where the home inspection is deductible would be if you are a real estate agent who is purchasing the inspection for your client. In this case as well, the cost of the inspection would be a deductible business expense for the agent purchasing the inspection, but NOT the home-buying or home-selling client. A few of the agents we work with do this as standard practice; paying for the inspection for their client and saving them several hundred dollars is a nice gift they won’t forget.

It should be noted that in the case of the of an agent purchasing an inspection, unless that agent is also the person buying or selling the property, they are not the CLIENT. The client is always the end-user of the inspeciton or the seller. This is important: the client is the individual who is named in the inspection report and the individual who must sign the inspection agreement before the home inspection report is released.

All real estate transactions still need a home inspection.

Yes, it is a bother that the inspection fee is not deductible for the rest of us. That said, a home inspection is still an extremely wise precaution for any home purchase. For the relatively low price of the home inspection, at least one of three things will be true:

• The home is in need of repairs, sometimes minor but sometimes significant, and the seller will then either repair the deficient items at their cost or credit the homebuyer with funds to have the items repaired on their own. This is amount is extremely likely to be greater than the amount of the inspection fee.
• The home inspection reveals the property to be in such poor condition or in need of such siginifcant repairs that you decide to walk on the property altogether. Although this is difficult to quantify, the home inspection report in this case probably saved you thousands to tens of thousands of dollars in repair costs and probably saved you a lot of headache. This happens more often than you think.
• The property is in above average condition and you now have both an itemized repair / maintenance list for you to work on at your liesure and make improvments as you can, as well as the peace of mind that you aren’t buying a money pit. Well worth it in my opinion.