If you’ve been thinking about designing and constructing the home of your dreams, then you are likely aware that there can be a long list of potential expenses. But did you also know that you may be able to deduct some of the related expenses on your tax return?
One area where you could see some nice tax deductions is with the purchase and installation of environmentally – or “green” – materials. These can include energy efficient doors and windows, as well as skylights, that adhere to the U.S. Department of Energy’s efficiency standards.
In many cases, it will require that you obtain a construction loan for the home building process. In this case, you could be able to deduct the interest that you pay on this loan – at least for the first two years – provided that the home will be used as either your primary or your secondary residence.
In addition, if you made a down payment on the home that amounted to less than 20% of the home’s value, and in turn, you are required to pay mortgage insurance premiums, then the IRS will also allow you to write off this expense. Here again, though, the home that you’re paying this mortgage insurance on must be your primary residence, or your secondary / vacation home.
In ensuring that you get all of the tax deductions available to you, it is important that you keep a well documented list of all of your home building costs, and that you also have proof of such as expenses (such as the receipts).
If you are planning to construct your new, custom dream home in the Orlando or surrounding Central Florida locale, and you’d like to learn more about the process and the potential cost, then give Rare Builders a call today!