A fact within the Construction world that everyone might not know is that there are tax breaks and incentives when doing home construction or remodeling. New York state offers a variety of incentives to companies expanding or relocating. An example of New York State helping with the development of property improvement is the Real Property Tax Abatement. NYS says that this is used to encourage development, expansion and improvement of commercial property. A 10-year property tax abatement is available to offset increased assessments due to improvements to business and commercial property.
There are also sales tax exemptions involved in the purchasing of construction materials. You are allowed to take a credit and subtract the credit amount from the amount of sales tax due when you file your state tax return. Sales tax comes into play with the contractors most often. A contractor has to pay sales tax to their suppliers when supplies and materials are bought, contractors collect sales tax on certain jobs they perform for their customers. When materials are bought from a supplier and those materials are transferred to the customer as part of a taxable repair, maintenance, or installation service, sales tax must be paid at the time of purchase. However, the tax the contractor paid on these materials qualifies for a sales tax credit. Examples of these materials would be plywood, drywall, shingles, and 2 x 4s. Other examples are nails, screws, bolts, and staples. Electrical, plumbing, and landscaping materials could also be used as a sales tax credit.
Other tax exemptions and abatement programs deal with “green construction”. New York State provides the Green Roof Tax Abatement which allows a tax abatement for “Green Roofs”. The tax abatement is equal to $4.50 per square foot of green roof space, and the Solar Electric Generating System Tax Abatement which allows a tax abatement for installing solar electric generating systems in class one, two and four properties. A recent legislation signed into effect by President Obama increased the percentage of the cost of building materials to 30% and respectively $1,500. A list of eligible renovations has also been expanded to include many items that were borderline on the last initiative. Something that people may not understand is that a tax credit is actually better than a rebate because it’s a benefit in after-tax dollars.
Home renovation and construction is really a benefit for people. Not only do people get non-taxable money back, but also the satisfaction of a newly remodeled and updated home.