Can I Deduct Heating Oil Expenses?
You cannot deduct heating oil expenses for your owner-occupied, permanent residence. Should you have a qualified home office, you may be able deduct a portion of your heating oil expenses. If you own rental property, you may deduct heating oil costs as business expenses. Heating expenses for your personal home -- whether those expenses be heating oil, natural gas, solar or electricity -- are not deductible per IRS (Internal Revenue Service) regulations and the U.S. tax code.
Other People Are Reading
-
Personal Owner-Occupied Homes
-
Homeowners cannot deduct most expenses related to their residence. Utilities, including heat, air conditioning, telephone, electricity and the like, are not deductible. The only tax-deductible expenses are mortgage interest (not principal payments), real estate taxes and casualty losses that exceed insurance reimbursements. Adding a room, installing a new heating system or making any improvements that increase your home's value should be added to your cost basis (purchase price minus depreciation). Repairs, maintenance and other necessary home operating expenses, including heating oil, are not tax-deductible.
Home Office Deductibility
-
If you have a "qualified" home office, you may deduct some of your heating oil costs from your taxable income by using the IRS formula on Form 8829. For example, assume your home office occupies 300 square feet of your 1,500-square-foot home. Since this equals 20 percent of your home's livable space, you can deduct an equal percentage of your home heating oil cost. Therefore, if you spent $1,000 on heating oil in a tax year, you'd be allowed to deduct $200 on form 8829 as a part of your home office expenses.
-
Rental Property
-
If you own a house or condo that you rent out to tenants, you may deduct your heating oil cost as a valid business expense. In most cases, all your operating expenses related to rental property are tax-deductible as the costs of doing business. You normally use IRS Schedule E (Supplemental Income and Loss) to record your rental income and deduct your operating expenses, including any heating oil costs.
Special Rules for Residence Rentals
-
Should you rent a property that also qualifies as your primary residence or vacation home, more complex special tax rules apply. Depending on the division of time you use the home as a residence versus the period you rent it out, you must allocate your expenses proportionately. For example, if you rent out your home for three months per year, you can deduct 25 percent of your operating expenses, including any heating oil cost.
-
References
Resources
- Photo Credit George Doyle/Stockbyte/Getty Images
