If you plan to buy a home this year, consider some of these credits and deductions for homeowners in Virginia and Maryland.
A tax credit is a government tax break or financial incentive that deducts a specific amount from your tax bill. There are a variety of tax credits and deductions, especially for new home construction, that can reduce some of the costs of owning a home. These credits and deductions will depend on the state you reside in, and in most cases, you’ll have to itemize your expenses, which means you can’t claim the standard deduction when filing taxes.
Nevertheless, with tax credits, owning a new home can be a less expensive endeavor. By researching your state’s tax credits, you may find you qualify for many. So below, we’ll share three home tax credits and deductions to take advantage of right now.
Top Home Tax Credits and Deductions to Check Out This Year
Property Tax Deduction
One tax you can’t avoid is local property taxes. But you can reduce them with this tax deduction.
Again, to apply for this tax deduction, you have to itemize your expenses. If you file married, there’s a limit of $10,000 that you can deduct on the total amount of state and local property, sales, and income taxes, and a limit of $5,000 if you file separately.
Mortgage Interest Deduction
This is a significant tax deduction for many homeowners because it deducts mortgage interest. Again, you must itemize expenses to get this tax deduction. You can deduct interest on up to $750,000 of debt involving the purchase or improvement of your primary or a single secondary home.
The improvements have to be significant and result in the increased value of your home. Such as expanding or adding adaptations like an elevator. To receive the tax deduction, your lender will give you a Form 1098 at the beginning of the year, stating the mortgage interest you paid last year.
State Green Tax Credit
Taxpayers who go green with their homes and independently explore and install these features as aftermarket additions to their Craftmark home might qualify for these credits. Savings are 30% on qualified new systems that use wind, solar, geothermal, or fuel cell power for electricity, heating water, or regulating temperature. This credit is for homes placed in service after December 31, 2021, through January 1, 2033.
To take advantage of this tax credit, check with your state. Requirements vary significantly among locations. For example, starting this year, this credit doesn’t apply to biomass systems, but it does to battery storage technology.
Understanding Your New Home Tax Credits and Deductions
To determine the new home tax credits and deductions you are eligible for, we recommend checking with your state and local taxing authorities to learn more about the options available in your area, as they vary from state to state. Once you have determined the tax credits and deductions you can claim, the most convenient way to do so is by filing your federal taxes online.
One tax credit to especially consider is the state green tax credit, especially if you own a Craftmark Home. Our luxury homes are energy-efficient and we’re committed to consciously construct your dream space with minimal environmental impact.
Contact us today to learn more about Craftmark Green, and check out our communities to see even more of the value we deliver with our estate homes and townhomes.
Craftmark Homes is not a tax expert, but rather a new home construction expert. With that in mind, it is always a good idea to check with a financial and/or tax advisor to see what works best for your specific situation.