Considering a home renovation project but what to make sure you get the biggest bang for your buck? There are a number of contributing factors to the value of a particular upgrade. First, you should look into the long-term return on investment for any improvement. Beyond that though, there are some instant, home improvement tax credits available, depending on the upgrade you make. So, before deciding on any one upgrade in particular, make sure you know what sort of tax credits there are available to you.
The United States government wants to help make your home more energy efficient. One of the best ways to do this is with the investment into renewable energy. There are a number of upgrades that fall under this specific tax credit:
For actual residential renewable energy tax credits, there is a solar tax credit roof replacement option, which until the end of 2022, will cover 26% of the cost, including installation. This drops to 22% in 2023, and then goes away after that.
When considering what is the Residential Energy Credit, this 26% through 2022 and 22% for 2023 also covers solar-powered water heaters, geothermal heat pumps that meet Energy Star requirements, wind turbines that produce up to 100 kilowatts of electricity, and some fuel cells that pull energy off of hydrogen and other renewable energy.
There are no caps on the tax credit for your solar installation, nor on geothermal equipment, but if you're installing the fuel cells there is a cap of $500 per half-kilowatt of power it produces.
For homeowners, this tax credit will let you claim 10% of all qualified energy efficient home improvements. This includes new home insulation, some roofing materials, exterior doors, and exterior windows and skylights. So, if you're looking for a tax credit for new windows, you'll want to look into this program (the full name is Nonbusiness Energy Property Tax Credit).
Additional upgrades that can fall under this tax credit include the installation of electric heat pumps and electric heat pump water heaters, stoves that use biomass fuel, water heaters that use natural gas, new HVAC systems, plus hot water boilers and furnaces that use natural gas, oil, or propane.
The Department of Energy sets the standard for which home improvements and materials qualify for the nonbusiness energy property tax credit. To find out whether a particular type of equipment you installed in your home is eligible for the tax credit, read the manufacturer information, or contact the manufacturer directly. Generally speaking, the contractor who performed the installation will also know whether the item qualifies for a tax credit.
So here's the thing. You can't buy an Energy Star television and claim a tax deduction. It doesn't work that way. While you were able to file for some deductions in the past, almost all appliance-related deductions expired at the start of 2021, so the old Energy Star Appliances Tax Credits are no longer accepted.
The only appliances you can file for the Energy Star tax credits are now limited to devices that help improve your home's energy efficiency. A washing machine uses energy, so it won't qualify. Neither will a fridge, TV or any other device. Geothermal water pumps, energy-producing wind fans, solar-powered equipment and other such devices are now the only appliances that qualify.
Florida is one of the leaders when it comes to state-offered energy tax credits. There are dozens of options here, so it's best to look further into these particular programs (Florida Green Building Organization has a detailed list of Florida-specific credits). These credits are not only given out by the state, but by individual cities as well (there are energy incentives, for example, for the city of Orlando). There are tax credits for solar energy, renewable energy, power and light incentives, and you can even find special energy loans to help you cover the cost of solar installation with an improved interest rate over what you might pay for a traditional home improvement loan.
Homeowners in Florida have access to a variety of rebate programs, sales tax incentives and loan programs. These programs change year to year, so for the latest information about the types of programs that can benefit you, check out the DSIRE website. There, you'll find information about programs going back years and even decades, and can get up to date info on programs as things change.
Check back with the DSIRE website on a regular basis to find out which home improvements qualify for the largest credits. It may be that the home upgrades you want to make just happen to qualify for money back from the state or federal government.
When it comes to improving your home there are all kinds of renovation tax credits available to you. While the Energy Star appliance credits are, more or less, a thing of the past, you can still boost your property value, cut down energy costs, and move away from relying on fossil fuels by investing in solar and wind upgrades. You can also spring for new windows and even new siding. To get started with your upcoming home improvement, contact us for a free consultation.