tax credits for Homeowners

[psiryessir-gmail]

Hi,

We just moved into an older house that needed a lot of work. We had to replace the heating system with heat pumps, add windows, solar panels, and an electric vehicle plug (even though we don't have an electric car...maybe in the future.)

We also had to replace the gutters.(any tax credits for that?)

what forms do I need?

What else qualifies, the list of what we had to do is long>

[xmasbaby0]

You might be eligible for energy credits for the heating system, windows, solar panels, maybe the vehicle plug-in outlet....

Gutters?  No.

Home Ownership

There is not a first time home buyers credit on a Federal return. That ended in 2010. If your state has such as credit, you will be able to enter it when you prepare your state return.

Buying a home is not a guarantee of a big refund.  Your deductions for homeownership combined with your other deductions (if any) must exceed your standard deduction to change your tax due or refund. If you purchased your home late in the year, you do not even have a full year of home

ownership deductions.

Your closing costs on your new home are not deductible except for prepaid interest, prepaid property tax or loan origination fees.  There are no deductions for appraisal, inspections, title searches, settlement fees. etc.

Your down payment is not deductible.

Your homeowners insurance for fire, hazard, flood, etc. is not deductible for your own home.

Home improvements, repairs, maintenance, etc. for your own home are not deductible.  (with possible exceptions for certain energy credits)

Homeowners Association  (HOA) fees for your own home are not deductible.

HOMEOWNERSHIP DEDUCTIONS

It is very hard for a lot of people to use itemized deductions now that the standard deduction is so much higher.  Your home ownership may not have any effect on your tax due or refund, especially if you purchased the house late in the year.  

Standard Deduction

Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund.  The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting  tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach.  The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you.  Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes. 

2024 STANDARD DEDUCTION AMOUNTS

SINGLE $14,600    (65 or older/legally blind + $1950)

MARRIED FILING SEPARATELY $14,600    (65 or older/legally blind + $1550)

MARRIED FILING JOINTLY $29,200    (65 or older/legally blind + $1550)

HEAD OF HOUSEHOLD $21,900    (65 or older/legally blind + $1950)

[xmasbaby0]

@psiryessir-gmail Make sure you keep all the invoices and records of the improvements you make to your home, for someday when you sell it.

[Opus 17]

Repairs are not tax deductible, they are part of the normal routine of ownership.

Improvements are not deductible, but they add to the cost basis of the home.  That may reduce your capital gains when you sell.  Improvements add value to the property or extend its useful life, while repairs restore the property to as-is or as-was condition.  There is a discussion of repairs and improvements here.

https://www.irs.gov/forms-pubs/about-publication-523

Keep records of the cost of improvements as long as you own the home.

Certain improvements may qualify for a tax credit if they meet the required energy efficiency standards.  This would apply to windows and the heat pump (maybe, if they meet the required standard).  There is a separate credit for installing a solar system provided that it supplies electricity to a dwelling (a place where people live)--solar panels that provide power to a barn, shed, or that feed into the grid without being part of the house are not eligible.)

Instructions for the energy credits, including how to tell if the items you installed qualify, is here.

https://www.irs.gov/forms-pubs/about-form-5695