Your property- Taxes and Improvements
There are so many reasons to own a home. Here are just some of the financial benefits.
If you plan on making improvements for medical reasons, like adding a hand rail or wheel chair access you can likely write them off on your income taxes. Property owners should keep in mind that if you add on to a building or build additional buildings it could increase your tax assessed value and therefore your property taxes.
If you plan to add energy efficiency to your property such as: solar panels and water heaters, geothermal heat pump and other eco-appliances, new doors and/or windows you could receive a tax credit or a rebate from your city and/or utility provider.
When you are ready to sell your property, you may have to pay excise tax. Taxes paid on the amount profited when the property is sold. If you’ve lived in the home for two of the last five years as your primary residence, you’re exempt from paying excise tax on profits in the amount of $250,000 for a single person and $500,000 for a married couple. If the profit exceeds those thresholds, you’re still required to pay excise tax on whatever the amount over those thresholds equates to.
If you haven’t lived in the property, you still may be able to defer the payment of excise tax through a 1031 Tax Deferred Exchange .
You may also deduct mortgage interest paid on your tax return. There is even the possibility of deducting taxes on interest paid on a home equity line of credit. Always keep all your receipts and records for any improvements you make. Speak to your CPA or tax preparer to learn more. If you don’t have one, get in touch with me for a referral. If you’re ready to buy or sell property, give me a call.
What improvements have you made on your home?
Have you ever used the excise tax exemption or a 1031 exchange before?