When you’re in the process of building a new home, it may seem like the list of expenses is never ending. These can include the cost of a construction loan (and its associated interest) and a mortgage, as well as sales tax on the materials being used.
But the good news is that, in addition to having your dream home turned into a reality, you may also be able to garner some nice tax-related benefits by way of deductions. For example, if you took out a construction loan for the building of your new home and you also itemize your deductions on your annual tax return, then you can typically take a deduction on the interest that you’ve paid for the first 24 months of that loan.
You may also be allowed to deduct from your federal tax return the amount of the sales tax that you paid on your home’s building materials, provided that you paid state sales tax on these items and that the amount of tax due was more than the amount of your state and local income tax.
If your home mortgage lender required you to obtain mortgage insurance (if the down payment on the house you’re building was less than 20% of its value), then you may also be able to write off the amount of the premium on this coverage.
The tax deductions on your newly built home can be extremely beneficial. It is important to keep in mind, though, that you are not allowed to claim the standard deduction if you are also claiming itemized deductions.
Thinking about moving forward with the building of your ideal residence in Orlando or the Central Florida area? If so, give us a call, and we’ll help to answer any questions that you may have before getting started.
