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Can i deduct energy efficiency improvements made form a 203k refi?

I have not yet gotten the refi but i have considered 203k for some time. i just know fha also has an energy efficiency mortgage but i already own a home. is one better especially for tax purposes? by currando4235183 from Orem, Utah. Jan 16th 2015 Reply


Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

Your income tax position will not be affected by the type of mortgage you obtain. There are certain tax considerations if you pay your closing costs in cash, instead of including them in the loan proceeds.

Jan 16th 2015
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Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#77 ranked lender in Florida - 2,240 contributions

I do not believe you can, but speak to your accountant

Jan 16th 2015
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William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

Regarding tax benefits, it's best to contact an accountant in your state.. they would be more familiar with any tax incentives for EEI's.. regarding 203K's and FHA's EEM, although they are available for purchase or refi, you might want to stay away from this type of loan. FHA loans are one of the most expensive rehab loans you can do, and FHA requires a construction consultant to oversee the project at an additional cost to you, plus your capped at how much you can add for energy efficiency improvements.. .. the better loan would be the HomeStyle renovation loan.. No consultant fee's, no energy reports, no upfront mortgage insurance fee, and if you have greater than 20% equity, no monthly mortgage insurance.. You should really rely on a professional mortgage broker for advice rather than trying to figure it out on your own.. they are experienced in guiding you to the right loan product for YOUR specific scenario.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Jan 16th 2015
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Ron Pippin (RonPippin)
#26 ranked lender in Utah - 158 contributions

This is a great question for accountant. I'm located in Salt Lake. If you want to compare the two options, let me know and I will run some numbers for you. HelpMeWithAMortgage.com

Jan 16th 2015
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,240 contributions

Previous advice was good, there is no difference in the tax benfits based on they typd of mortgage, but check with your tax preparer about possible benefits based on the improvements you make. The energy related improvements mainly allow you to borrow more than you might otherwise be able to. FYI, there are other renovation loans (conventional) which may work better for you than a 203k. I offer both and can help, and would evaluate which options appear best for your situation. pdumouchel@primelending.com or 843-619-6025 http://pdumouchel.primelending.com **PrimeLending was #4 purchase mortgage lender in the US in 2012 and 2013 as determined by MarketTrac(c) for Jan-Dec 2012 & 2013

Jan 16th 2015
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Timothy Howard (timehoward)
#70 ranked lender in Utah - 154 contributions

Please give me call as there are other programs you can use and still get the rebates to make the home more energy efficient.. We can talk about the different programs to help you achieve this. As far as tax advice, I would see a CPA or a Financial Planner, They will have the best knowledge of this. my number is 435.764.8709www.yourmortgageguy.us

Jan 16th 2015
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Brett Pehrson (brettpehrson)
#19 ranked lender in Utah - 228 contributions

There has already been some good advice provided. I am also a qualified Tax Preparer in Salt Lake, PTIN P00957362. I am also well-versed in the renovation loans here in Utah. So, I'd be happy to help you through both matters. I will try to give you short answers to each here, though. First, the EEM essentially allows you to qualify with a higher debt ratio due to the anticipated cost-savings on utilities, etc. These specific improvements are also given special consideration in an FHA 203K calculation of how much money you may be able to borrow for improvements. These loans will begin to look more attractive in the next few days with mortgage insurance guidelines changing soon with FHA loans. However, there are good conventional rehab options available now, also; the HomeStyle Renovation Loan would certainly be one to consider, as well. To give you tax advice, the considerations to make here are related to "acquisition indebtedness" and "home equity" calculations. Home improvements are generally considered acquisition indebtedness in calculating both your tax basis for future calculations on any capital gains, as well as current calculations on what is deductible through Itemizing on Sch. A. If you can document, without a doubt, those funds borrowed were used to "buy, build or substantially improve" your principal residence, then this is certainly given more favorable tax treatment. So, if it makes sense, then a renovation loan may be more preferential than a "cash-out" refinance or "home equity loan," these scenarios may limit your allowable itemized interest to $100,000 of indebtedness. Home Equity debt interest above $100k will be excluded from your itemized deduction, and it is also not counted toward the Alternative Minimum Tax calculations, if this applies. With regard to energy efficient improvements, it does not matter how you choose to finance them specifically, but documentation of qualifying for specific refundable credits will be required. So, your considerations here should be related to how much you need to borrow and for what. From there you determine if any of the costs and/or limitations of any approach will be detrimental to your situation. I hope this all helps. Give me a call at 801-918-9385 or email me at bpehrson@advfund.com, if you'd like to discuss how this specifically relates to your needs.

Jan 16th 2015
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