There is something really special and exciting about building a custom home, but it does come with expenses. Finding ways to earn tax breaks along the way can help you to manage those expenses effectively. Here are a few great ways to earn tax breaks while you are building your custom home.
One of the most common tax breaks related to building a home is the tax break you can take on your mortgage interest. With a mortgage interest tax break, you can deduct the interest of a home with a debt of up to $750,000. That means that you can save a pretty significant amount on your taxes, especially if your debt is on the higher end towards the top of the cap. When you’re building, it might be worthwhile to invest in some upgrades that you love so that you are closer to the cap. This way, you can get more back from your taxes while enjoying your home even more.
Solar panels are great because they can help you to get more out of your home and spend less on energy while also decreasing your carbon footprint. In addition to the utility bill savings, you will have each month, and the fact that you can actually sell energy back to the energy companies, solar will also help you to save on your taxes. Tax credits can be worth as much as 26 percent of the solar system cost. So even though the initial cost can be expensive, you can recoup a lot of that through your taxes, and eventually, the solar system will pay for itself.
Build Office Space
If you work from home and especially if you work for yourself or as a contractor, office space can be deducted from your taxes. That means that by building in office space you can make your work a little bit easier and save on your taxes. You can deduct up to 300 square feet, so if you can use the space for work, you may as well create an office space that will help you to be more productive.
Building a home should be a rewarding experience that results in you having a home you love. While you know that building your home will be expensive, it is worth the expense, especially when you take advantage of available tax breaks. Build a home you love so you can enjoy it for years to come.