In the United States, unbeknownst to many, the tax code provides numerous benefits for homeowners. Buying a house can actually reduce the amount of taxes you pay. Tax savings can be realized for investors and individual home owners alike. There are many tax benefits associated with owning property - we'll outline a few below.
Mortgage Interest
Homeowners whose mortgage is less than $750,000 benefit from a deduction of the interest paid on the loan. This is considered to be one of the major benefits homeowners have over those renting their homes. Formerly, this limit was first placed at $1 million, but the 2017 Tax Cuts and Jobs Act (TCJA) reduced it and clarified several worries pertaining to the deduction of interests from a home equity line of credit. Nevertheless, to be eligible for this deduction, you must stay under the stipulated $750,000 limit.
Tax Breaks for Solar Panels
There are also tax incentives for those who make use of energy-efficient upgrades on their properties. One of such energy-efficient upgrade is the installation of solar panels. Homeowners are allowed to claim tax deductions on the use of solar energy for both electric and water heating accessories (this should be done from now through to 2021). Nonetheless, the longer you wait to install these energy-efficient upgrades, the less money you'll receive by way of tax credits. This deduction is known as the Investment Tax Credit (ITC) also called the Federal Solar Tax Credit. The ITC allows you to deduct 26% of the total cost of installing a solar panel on your property. This is deducted from your federal taxes.
Tax Breaks for Windmills
There is another federal incentive for U.S. homeowners utilizing windmills. This is because the windmill is also an energy-efficient upgrade and it makes you eligible for a tax deduction. The tax deduction, in this case, is known as the wind power credit, and it covers 30% of the total cost of installing a windmill at your main home and another property. If you want these tax credits, make sure you keep every piece of documentation related to the purchase and installation in order to avoid future conflicts with the IRS and to make sure you maintain your tax credit.
The government provides tax savings to homeowners to incentivize the citizens to purchase property. If you want to benefit from these tax breaks, all you need to do is purchase a home!
What are you waiting for? The time is now!
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