Regardless of whether you purchase an existing home, or you opt to move forward with building a new custom home, in most cases, your house is usually the largest purchase that most people make. With that in mind, there could be some tax breaks available to you if you are building a new custom home. These tax breaks can actually come in one of two forms – tax deductions or tax credits.
For those who are building a new custom home, there will oftentimes be a construction loan involved. And, as a borrower – and if you also happen to itemize your deductions – you could be able to deduct the interest that you paid on a construction loan during the first 24 months of that loan. (It is important to note that this deduction will only apply to the first $1 million of total loan proceeds, and only if the home will be your primary or secondary residence).
Today, there are many home builders that make use of environmentally friendly, or “green,” practices. Here, there are a number of possible tax breaks that could be available to you, including savings for the installation of energy-efficient solar heating, as well as air conditioning, insulation, water heaters, and / or lighting.
How can you claim these tax deductions and / or credits?
They can easily be claimed on Form 1040 when filing your personal tax return. When filing your taxes, it is important to keep in mind, though, that if you are claiming itemized deductions, you will not be able to claim the standard deduction.
Have questions about building a new, custom home in Orlando or the surrounding Central Florida area? We can help! Give Rare Builders a call today.