Cashing In On Saving the World Discussion on Energy Efficiency Tax Credits By Adam Miller Adam is a Candidate for CFP® certification, a trusted fiduciary and fee-only financial planner at Elderado Financial. He works passionately to help families pay less in taxes and give more to the people and organizations they care about.
Growing up I remember parents shouting, “close the door, I am not paying to heat the whole neighborhood.” Unfortunately today, many folks still heat the entire neighborhood. If you were to take a look at your home, chances are you would find numerous areas in which you could reduce your utility bills. This year, the U.S. Government is telling folks to stop heating the whole neighborhood and they are giving us an incentive to make changes to our homes to become more efficient through federal tax credits. For the 2009 and 2010 tax years, qualified improvements to your home are eligible for a 30% tax credit up to $1500. Some of the projects are perfect for weekend warriors. The installation of a door or window or new insulation can really put a dent in your heating and cooling bill. Other projects can be a bit more time consuming and require professional installation such as a new asphalt or metal roof, central a/c Air Source Heat Pumps, a new furnace or circulating fan. These projects make quite a bit of sense if you are due for a replacement. If you are really looking to go green the tax credit applies to products that would allow you to power or heat your home by burning bio-mass, using solar or wind energy, or using the temperature of the earth to heat and cool your home. The tax credits aren’t limited to just your home. Upgrade to a Hybrid, electric, or alternative energy vehicle and you may be eligible for a credit there as well. Credits for vehicles are limited, make sure to visit www.fueleconomy.gov for more info. If you own a business, this might be a great time to make improvements to your commercial building. For systems placed
in service between 2006 and the end of 2013, you may be eligible for a tax deduction of up to $1.80 per square foot. There are also tax benefits out there for the one or two homebuilders still working. By taking advantage of the energy efficiency tax credit you save money on your investment and earn dividends in the future. The tax credit will give you cash back at tax season, and the upgrade will continue to save you money year in and year out on utility bills. In some cases, improvements will pay themselves off the first year through energy savings. In other cases it can take a decade to return your investment. Depending on the price tag of the project, the new credit can cut the amount of time it takes to break even by 1/3 or more. Make sure you keep all of your documentation and have contractors break out labor and material costs. You will need to make sure that your upgrades meet the requirements for the program. You can find details and links to tax forms at www.energystar.gov/taxcredits. Make sure you understand how the tax credits will affect you and talk to a qualified tax professional for details Now is a great time to heed the advice of our parents, and take the incentives from Uncle Sam. Creating energy efficiencies will save you money and make your home a more comfortable place to live.
Adam Miller www.elderadofinancial.com 1100 S. Townsend – Montrose, CO 81401 – (970) 249-9900
Links to information regarding the energy efficient tax credits that will SAVE YOU MONEY! www.dsireusa.org – Database of state incentives for renewables and efficiency. www.energystar.gov – Details on federal tax credits for energy efficiency. -Energy Savings Calculators from Energy Star. Input your information to determine how much you will save. -Useful tips for saving money by using your appliances more efficiently. -Tips for purchasing energy efficient products. -Click on >Tax Credit Under the Energy Bill in the lower right to learn about tax credits for each product. www.irs.gov – Tax information on the energy efficiency tax credits. Form 5695 will be available in late 2009 or early 2010 to apply for the Residential Energy Efficient Property Credit. www.ahrinet.org – Gives specifics on tax credits for improvements in water heating systems, HVAC and provides information for homebuilders. www.ase.org – Alliance to Save Energy provides details on the tax credit for consumers and businesses. www.natresnet.org – Provides IRS rules regarding the energy efficient tax credits. www.energy.gov/taxbreaks gives an overview of the energy saving improvement tax credit. www.hes.lbl.gov – Energy audit tool to give you an estimate on potential savings for energy upgrades.