Appliances

Tax Benefits of Home Ownership

The deductions you’re eligible to take for mortgage interest, property taxes and other deductions greatly increase the financial tax benefits of home ownership.

Mortgage Deductions

Here’s how it works.
Assume:
$ 9,877 = Mortgage interest paid (a loan of $150,000 for 30 years @ 7%, using year-five interest)
$ 2,700 = Property taxes (at 1.5% on $180,000 assessed value)
$12,577 = Total deduction

Then, multiply your total deduction by your tax rate.
For example, at a 28% tax rate:
12,577 x 0.28 = $3,521.56
$3,521.56 = Amount you have lowered your federal income tax (at 28% tax rate)
Note: Mortgage interest may not be deductible on loans over $1.1 million. In addition, deductions are decreased
when total income reaches a certain level.

Other benefits

AppliancesEnergy Credits

Some home appliances are eligible for tax credits according to the Tax Relief and Job Creation Act of 2010. Appliances that may be eligible include:

  • Dishwashers
  • Clothes washers
  • Refrigerators

You should refer to the IRS document.

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Energy STAR Credits

The Energy STAR credits vary depending on the category.  Here is a basic breakdown from the government website:

SECTION 1  – PRODUCT CATEGORIES

  • Biomass Stoves
  • Heating, Ventilating, Air Conditioning (HVAC)
  • Insulation
  • Roofs (Metal & Asphalt)
  • Water Heaters (non-solar)
  • Windows & Doors
Tax Credit:
10% of cost up to $500 or a specific amount from $50–$300
Expires:
December 31, 2013
Details:
Must be an existing home & your principal residence. New construction and rentals do not qualify.

SECTION 2 – PRODUCT CATEGORIES

The following applies to the 3 product categories below:

  • Geothermal Heat Pumps
  • Small Wind Turbines (Residential)
  • Solar Energy Systems
Tax Credit:
30% of cost with no upper limit
Expires:
December 31, 2016
Details:
Existing homes & new construction qualify. Both principal residences and second homes qualify. Rentals do not qualify.

SECTION 3 – PRODUCT CATEGORIES

The following applies to the single product category below:

  • Fuel Cells (Residential Fuel Cell and Microturbine System)
Tax Credit:
Credit Details: 30% of the cost, up to $500 per .5 kW of power capacity
Expires:
December 31, 2016
Details:
Existing homes & new construction qualify. Must be your principal residence. Rentals and second homes do not qualify.

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First Time Homebuyer Credit

The IRS offers a tool to help you determine your eligibility, and can be accessed here.

 

 

 

 

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