Building a new custom home can require a long list of expenses, including your down payment, permits, insurance, and construction costs. Unfortunately, most of the expenses that pertain to building a new home are not deductible on your taxes. But that doesn’t mean that you can’t get at least some type of tax break on your new endeavor.
For instance, similar to with a regular home mortgage, if you secured a construction loan for the building of the home, then you can deduct the interest on this loan – at least for the interest you paid during the first 24 months.
Likewise, if you secure a mortgage on your newly built home, you may also be able to deduct this interest going forward (up to $750,000 of debt), as well as any points that you paid for securing the mortgage.
In addition to tax deductions, you could qualify for various tax credits. In this case, if you install energy efficient heating, air condition, and / or insulation, you may see some tax breaks here. (The tax credits that you qualify for should be included on your IRS Form 1040).
Because the costs that are associated with the of building a new home are considered personal expenses (as versus business expenses that pertain to owners of rental real estate), you can claim any federal income tax credits and / or tax deductions on IRS Form 1040 as well.
Are you still wondering whether building a new home in the Orlando or surrounding Central Florida area is right for you? If so, we can help.
At Rare Builders, we focus on constructing quality homes that meet the specific needs of our clients. So, if you’re ready to move forward on building your new dream home, just contact us for more information on how to get started.