With the 2022 holiday season in full swing, it will soon be time to ring in a new year – and with that, the April “tax season.” The good news is that there are many potential items you could deduct, in turn, reducing the amount of income tax that you owe (or alternatively, increasing the amount of the refund that you receive). Some of these are associated with the costs for building a new home.
Although many home building expenses – like your down payment and the cost of installing and connecting utilities – are not tax deductible, there are others that could provide you with some tax relief.
For instance, the IRS allows you to deduct the amount of mortgage interest that you paid – along with interest on a construction loan (up to 24 months on the latter) – provided that the home you are building will be your primary or secondary residence.
In addition, it is possible that you paid sales tax on building materials for the new home. If so, and if the amount that you paid was more than the amount of your state and local income taxes, then you may deduct the sales tax from your federal taxable income.
Oftentimes, using environmentally friendly, or “green,” building materials – such as energy-efficient solar heating, air conditioning, and/or insulation – can also land you various federal and/or state tax breaks that come in the form of deductions or credits.
If you are still in the planning stages and want to build your new custom dream home in Orlando or the surrounding Central Florida area, it is important to discuss your objectives, time frame, and estimated costs with an experienced local builder. That way, you will know what to anticipate from both a time and expense perspective.
WJ Homes has over 50 years of real estate development and construction experience – which includes more than 3,000 projects. So, contact us when you’re ready to see your custom dream home turn into a reality.