As the cost of achieving the American dream of home ownership continues rising, several taxpayers can claim more generous incentives during the upcoming tax season under the new homeowners tax credit.
Home Services website Angi said homeowners spend an average of $12,904 annually on repairs, upkeep, and emergencies, not counting mortgage payments or property taxes.
This is a photo representation of a home as taxpayers may receive more money under new homeowners tax credit (Photo by Tierra Mallorca on Unsplash)
New Homeowners Tax Credit: Breaks Available For Making Home More Energy-Efficient?
For eligible home repair costs linked to energy efficiency, such as upgrading exterior doors, windows, insulating materials, or water heaters, The New York Times said homeowners can instead claim a lifetime credit of up to $500 for the 2022 tax year under the new homeowners tax credit scheme.
The new homeowners tax credit will, however, rise to $1,200 per year beginning in 2023 for specific upgrades done through 2032. Another credit of up to $2,000 per year is also available for different new heat pumps and water heaters. For each year through 2032, the credits can be combined to earn up to $3,200.
Through 2034, the domestic clean energy property credit, which applies to things like solar panels and wind turbines, was also extended. The credit is 30 percent of eligible costs from 2022 to 2032.
ALSO READ: Inflation Reduction Act: Washington Provides Tax Credits Of Up To $8,000 For Installing Heat Pump
How Homeowner Tax Breaks Work
CNet said most homeowner income tax benefits are tax deductions, which decrease your taxable income. You pay less in taxes the lower the percentage of your income that is taxed.
You must choose whether to itemize deductions, such as contributions to charities and state taxes, or to accept the standard deduction, which is $12,950 for single filers, $25,900 for joint filers, or $19,400 for heads of household or married filers filing separately.
You must itemize your deductions on Form 1040 Schedule A to be eligible for homeowner tax deductions; whether to itemize depends on whether your itemized deductions exceed your standard deduction.
You may easily determine whether to itemize with the aid of the best tax preparation software.
You are not required to itemize when claiming homeowner tax credits. You may often receive such credits whether or whether you itemize deductions since they immediately lower the amount of taxes you owe.
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