Owning a home can be expensive – which is why a lot of people prefer apartments or rental properties. If you’re a homeowner, however, you’ll find that the government does what it can to help and if you take the time, the following incentives can benefit you.
Clean Energy Incentives in Most States
Installing residential solar panels here in Sandy, Utah or other states with energy incentives can significantly minimize the cost of the installation. While the government won’t pay for the purchase outright, you can deduct the amount from your taxable income.
Utah allows reduction from the income taxes for up to 25% of the cost of the solar panel system or $1,600, whichever is lower. That’s aside from the federal incentive of 30% for installing a solar energy system.
Home Office Deduction
Telecommuting is the trend nowadays as more and more companies prefer not having overhead costs. Plus, employees relax better at home, can avoid traffic, and even be more productive than in the office. The government supports this initiative by allowing deduction of office expenses from your income statement.
In fact, you don’t even have to be a purely-telecommuting employee to get this benefit. There are only two requirements: (1) that the home office is in your dwelling and (2) that the home office is used exclusively and regularly for business.
Home Improvement Incentives
While you might not be thinking about selling your home, it helps to keep track of any improvements you’ve made on the property. List down all improvements, the year you made them, and the associated costs for the improvement. This will give you a better position for the bargain if you do decide to sell your home.
This is because homeowners are taxed for every amount of home value appreciation above $500,000 for couples. If you’re single, then that amount is just $250,000. To find out whether you’ll have to pay tax, the computation is the purchase price plus the cost of home improvements.
With papers to back you up, there will be no overestimation, and you’ll only have to pay what you need.
Local Property Taxes
Property taxes are within the purview of the local government and not the federal one. This is why you’ll note that when paying on a federal level, any local taxes you’ve paid for the property are disqualified or not considered in figuring out the net taxable income.
Of course, those who are renting properties don’t have to pay property taxes in the first place. But the exemption on a federal level at least prevents that added “ouch” that comes from paying taxes. Also, note that property taxes are assessed on a routine basis and take into consideration the improvements you’ve made on the property.
If you time your improvements just right, you can avoid having all those improvements stack up on the house.
Of course, you’ll have to do your research when it comes to incentives as well as be prepared for paperwork. Once done, however, you’ll find that this will greatly benefit your home finances.