You’ve no doubt heard that solar panels, insulation, and other energy-efficient upgrades can help curb your electric bills—but did you know these renovations can help save you money at tax time, too? That’s right, Uncle Sam likes to reward eco-conscious Americans by showering them with 2016 energy tax credits. So what are they, and how do they work?
Allow us to break it down. For starters, the green upgrades below all qualify as tax credits. Unlike tax deductions, which pare down your taxable income, tax credits directly reduce how much money you pay. In other words: A $300 tax credit means you save $300, plain and simple. So save those receipts!
Here are some tax credits you might qualify for if you added some energy-efficient or energy-producing systems to your home in 2016. But if you missed out last year, some (or perhaps all) of these tax credits could stick around for 2017 and beyond. In other words, it’s time to get cracking!
These tax credits, dubbed “nonbusiness energy property credits” by the IRS, apply to primary residences (not vacation homes) built before Jan. 1, 2016. The reason: This tax break is designed to motivate homeowners to invest in upgrading inefficient systems on older homes to save energy. Keep in mind there’s a lifetime cap of $500, so once you’ve maxed out you’re done.
You can take a $300 credit for qualifying:
- biomass stoves—which burn cleaner plant-based fuel
- central air-conditioning units—which are more efficient than individual window units
- air source heat pumps—which are more energy-efficient than furnaces and air conditioners
- energy-efficient nonsolar tankless water heaters—which will save you about $115 per year in hot water bills
Treat yourself to a $150 credit for qualifying:
- hot water boilers
- furnaces (plus an additional $50 for the fan)
And take 10% of the cost (not including labor) of the following:
- energy-efficient roofs
- energy-efficient doors
- energy-efficient windows and skylights (but only up to $200)
Deadline: These home improvements must have been finished and paid for by Dec. 31, 2016—the day these tax breaks expired. That said, many tax credits, including all of the above, do get renewed, says Mark Jaegerof TaxAct. In fact, all of the above have been renewed every year since 2008 except, randomly, 2009. So, odds are decent they could be renewed again in 2017, but that’s by no means a guarantee, so don’t count those chickens until they’re hatched.
These tax credits, which the IRS calls “residential energy efficient property credits,” apply to all residential properties—not just older homes or main digs. Even better, there’s no upper limit to this tax credit, so you can really save a bundle.
You can get a credit for 30% of the cost (including installation) of qualifying:
- small wind turbines
- solar water heaters, as long as they aren’t used for pools or hot tubs
- solar panels
- geothermal heat pumps, an energy-efficient system that transfers heat to and from the ground
- fuel cells are also eligible for a 30% credit, including installation, but only at a main residence
Deadline: This batch of credits is good through 2019, then after that will begin phasing out. In 2020, those systems will be allowed a 26% credit, 22% in 2021, then will expire entirely by 2022. As usual, there’s no telling whether Congress will decide to re-up these credits, so it’s best to collect them while you can.
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· Unless of course, you are a resident of Arizona or Hawaii!
· Every hour in the United States: 649 homes are sold, 177 homes regain equity (meaning they are no longer underwater on their mortgage), and the median home price rises $1.86!
We hope you found this information helpful. Please contact The DiPeso Group for all your Jersey Shore real estate needs!
courtesy of realtor.com