Homeowners use sustainable, energy-efficient materials for many reasons and the financial benefits of going green are certainly a primary reason. A clean environment leads to simpler and healthier living. It also does wonders for your pocketbook, by saving you energy costs and tedious home maintenance. Many green solutions to home improvement have the added bonus of qualifying for tax credits. Many Americans receive hundreds of dollars in payments and rebates from the federal government in support of their initiative in implementing green energy choices into their daily lives. Let's walk through the tax credits that are currently available to homeowners who make the choice to "go green."
Solar Energy Installation
Many state and federal governments have created initiatives to encourage private citizens to install solar panels. If you install solar panels, you are eligible to receive up to 30% the cost of materials and installation. This is the federal government's most liberal green tax credit policy, with no maximum rebate cap, and including the installation in the total cost. The only specification is that the solar panels be certified by a state or federal organization. Individual state tax credits vary depending on region and demand, but even if your state does not have a tax credit set up, you can still earn Solar Renewable Energy Credits based on the amount of electricity your panels generate. These points can then be sold to companies and state facilities, offsetting the cost through revenue if not a rebate.
Energy-Efficient Windows and Doors
Installing energy-efficient windows and doors are also a great money saving tip. If the models are approved by ENERGY STAR, an EPA founded voluntary labeling program who focus on identifying and promoting energy safe materials, they can earn you a tax credit equal to 10% of your product cost. Installations are not included in this rebate calculation, however. This incentive also has a cap. Windows and skylights are eligible to receive up to $200, and doors up to $500.
Upgrading your heating, cooling, or ventilation system may also qualify you for a federal tax credit. However, the guidelines for these systems are complex, so if you want to go this route you must pay attention to detail. ENERGY STAR-rated HVAC systems may be eligible for up to 10% of the combined costs of repairs, though your rebate amount will not exceed $500 regardless of the cost of materials. Other price caps apply to specific items. An air-circulation fan is only eligible for $50, while a furnace or boiler may qualify for up to $300 in rebates. Replacing a furnace cuts down on the price of day-to-day living as well, so don't be intimidated by the complicated tax deductions. A new furnace will improve your energy costs even if the tax credits are minimal.
ENERGY STAR-rated roofs, typically made of heat-efficient metal or asphalt, may be eligible for a tax credit of 10% of the cost of materials. This tax credit is limited to a lifetime amount of $500. Consult with a contractor before picking your roof materials, as even roofs with high EVERGY STAR-approvals might not qualify. Climate and region can play a big difference in what is considered safe and effective, and also what qualified for a tax credit.
Insulation practically guarantees a 10% tax credit on the cost of the materials. While the maximum credit is $500, most 10% on most insulation options will not be affected. ENERGY STAR is quite flexible when it comes to insulation, and nearly all are effective options have been approved. This includes foams and sprays, as well as air-sealant caulk. The complete list of eligible materials can be found on the ENERGY STAR website.
Armed with these facts and figures, peruse your home and see what improvements you could "Go Green" on and save. When April rolls around, just pull out that IRS Form 5695 and tell your accountant about the repairs you've done. Keep those receipts, and you'll be well on your way to saving green while living green.
Please be advised that the figures are accurate the date this article was published. Readers should always speak to their accountant prior to making energy-efficient home improvements, expecting to receive a tax rebate from those improvements.
Images used with permission, courtesy of www.bigstock.com and www.dreamstime.com