Home staging is the marketing of a home by a home stager, after the homeowners have cleaned, painted, and made minor repairs. This 'marketing' of the property qualifies as an advertising expense for homeowners selling their primary or secondary homes. Since a home stager prepares a home for potential home buyers, the IRS considers the service as an advertising expense, as long as the home stager has been hired for the sole purpose of selling the home. The costs of staging are subtracted from the proceeds of the sale of the home and decrease the total realized profit.
There are a couple of important guidelines to consider:
- If a house is staged and then taken off the market, the staging expenses are not tax deductible.
- If the house is used as a personal residence, there are no tax benefits for making repairs; only for home improvements. (e.g. - a repair is replacing a broken window, an improvement is adding a new deck)
- Decorative accessories, purchased by the homeowner for the staging of the home, are not tax deductible as the homeowner can move these items with them. If these items or consultation services are provided by the stager as a part of the staging, they are tax deductible.
"Most sellers do not realize that homes sell faster with staging, therefore saving them money in the long run. They try to make it dollar for dollar. In other words, they look at $3K-$5K for staging as something they need to make back. When in reality the staging creates competition and higher return in a shorter amount of time," said Realtor Valerie Moldow of Better Homes and Gardens Rand Realty. As a stager, I concur with Valerie's opinion.
In conclusion, staging is a valuable tool. The fact that it can be tax deductible to decrease the total realized profit for homeowners when selling their home, is another bonus!
For more information, reference IRS Publication No. 523 on staging.