Purchasing or building a new home is a somewhat expensive and complicated transaction, but one that comes with significant benefits.
Purchasing or building a new home is a somewhat expensive and complicated transaction, but one that comes with significant benefits. And while many of those benefits range from the satisfaction that comes with settling in your new home and the future memories that will be made within it, there are actually some financial benefits that come with it as well. Here are a few things you may be able to write off on your taxes!
Construction Loan Interest
If you’verecently built your new home and were able to itemize your deductions, you can deduct the interest you paid during the first 34 months of the construction loan. However, the deductible only applies if the home becomes either your primary or secondary residence, and it only applies to the first $1 million in total loan proceeds, including interest. There may also be a limit depending on how you’re filing.
Mortgage Interest
This is often the biggest tax deduction for homeowners who itemize. Since a portion of eachmortgagepayment goes toward interest on the loan, you can deduct the interest you paid up to a limit. Your mortgage provider will send you a yearly statement that shows just how much interest you paid during any given year.
State Sales Tax
If you paid state sales tax when purchasing building materials and that total was greater than your state and local income tax, you may be able to deduct from your federal taxable income. Remember, this is an itemized deduction, so it can’t be used with other deductions – it’s one or the other!
“Green” Tax Credits
If you’ve installedrenewable sources of energy equipmentin your new home such as solar panels, you may be eligible for the Renewable Energy Efficiency Property Credit. There may also be local and state tax credits for other credits and deductions for a variety of environmentally friendly home-construction practices and materials. These can include energy-efficient solar heating, insulation, air conditioning, lightening, and water heaters.
Home Office Expenses
Now more than ever, people are going to be able to write off home office expenses during the next tax season. You can either use the IRS’ simplified method or keep track of all related office expenses for an itemized deduction. Check the IRS’websiteto see if yourhome officewill qualify as a tax deduction, too!
Building a home can be expensive, but there arequite a few benefits to customizing your dream home. Find out how Atmos is partnering with interested new homeowners to walk them through the journey without all of the stress. Get started today!
