Common Tax Deductions to New House Construction
Buying or building a new home is a costly and complicated transaction. For example, according to the National Association of Home Builders, the average cost of constructing a single-family home in the USA in 2009 was $222,511. However, there is a silver lining to the huge expense of buying a new house: tax deductions. The IRS provides tax breaks for homeowners to stimulate the market and help homeowners cover the expenses of home ownership.
First-Time Homebuyer Credit
The IRS grants citizens who purchase a brand new home construction for the very first time with a tax credit. Terms and the size of tax credits differ from year to year. For example in 2010, homebuyers could submit an application for a tax credit of up to $6,500.
Energy Efficiency Tax Credit
The IRS gives tax credits of up to $2,000 to builders that build energy-efficient houses. You are able to claim this deduction if you’re your own contractor. The criteria to be eligible for this deduction is that the home has to offer a 50 percent energy-efficiency improvement over the specifications needed from the 2004 International Energy Conservation Code. At least 20 percent of the energy savings must arise from improvements to the building envelope, like windows and doors.
Tax Credits on Windows and Skylights
The U.S Department of Energy supplies homeowners and house builders with guidance on which substances and products provide the best energy efficiency for your property. Products carry the Energy Star label. You may deduct up to $1,500 of the cost of doors, windows and skylights that fulfill the Department of Energy standards. This standards varies by area. For example, in California, windows must have a minimum U-factor of 0.35 and doorways must have suitable weatherstripping in addition to multiple glass panes to increase insulation. The U-factor describes the amount of heat that flows through a substance; the lower a material’s U-factor, the better.
Solar Energy Systems
When you install a solar power program to your new residence, you can claim up to 30% of the price tag. To be eligible for this tax break you must set up the solar system from the 31st of December, 2016. Solar water heaters also be eligible for a tax break as long as you use it for your house and not for your hot tub or swimming pool.