I'm putting my vacant home up for sale as a for sale by owner listing. I paid a $3,000 fee to a professional home stager to help make the house look like a designer showroom and attract buyers. The fee included renting and placing new furniture in the home, redecorating the windows, and adding various decorative items and props such as pillows, artwork, champagne glasses in the bedroom, and indoor plants.
The answer to your question is “yes.” Any advertising and advertising-related costs you, the homeowner, incur to sell your home are considered tax-deductible selling expenses.
What constitutes advertising for home sale purposes is fairly broadly construed by the IRS. It certainly includes the fee you pay to a professional home stager to dress up your home and make it look as attractive as possible to potential buyers. You deduct such fees from the proceeds from the sale (and thereby lower your potential capital gains tax obligation) along with other deductible sales expenses such as real estate broker’s commissions, legal fees, and other sales-related fees and costs. Be sure to keep your receipt from the home stager.
The only exception is where a home stager goes beyond merely dressing up a home and performs substantial home improvements such as installing new outside landscaping or adding a new fireplace, patio, or porch. The cost of such improvements is not deductible, but may be added to your home's tax basis, which will reduce the amount of profit you receive from the sale, if any. If you hire a home stager to perform or arrange for such extensive work, be sure to have him or her to itemize the bill you receive so that it separately shows the expenses for nondeductible improvements and deductible services like furniture rental.