Building a new custom home can be a great way to truly make your house YOUR home. But depending on the amenities that you choose, it can also come with a high price tag. According to Home Advisor, the average cost of building a new home in 2020 was just over $300,000.
So, how much of this cost – if any – is tax deductible?
The truth is that there aren’t a lot of tax deductions available to those who are building a new home if the structure will be used as your own personal residence. The same holds true for the cost of home improvements – although these expenses could help you to reduce taxation when the time comes to sell your home.
There are, however, still some tax-related incentives that you could be eligible for as a homeowner. These include:
- Mortgage Interest Deduction
- State Sales Taxes
One of the most beneficial tax incentives to owning a home – either newly built or pre-existing – is the interest that can be deducted on mortgage interest. Other loans, such as those for new home construction, may also be deductible in certain situations. (There is usually a maximum time limit of two years in this situation, though).
If you were required to pay state sales tax on the materials used to build a new home, these too could be tax deductible. In addition, you may qualify for various tax credits, as well, such as the installation of solar panels, wind turbines, solar water heaters, and similar energy-efficient devices.
If you’re considering a new custom home in the Orlando or Central Florida area, we can help you to create the ideal floor plan for your needs, as well as show you options that could fit in with your budget. So, contact us today. We look forward to meeting you – in-person, on the phone, or online.
Photo by Brett Jordan on Unsplash
Sources:
Common Tax Deductions for New House Construction. SFGATE. Updated February 24, 2021. https://homeguides.sfgate.com/common-tax-deductions-new-house-construction-8754.html
