Warm Sweet Home
Whether welcoming back college students on semester break, hosting some toasty neighborhood get-togethers or just snuggling in yourself, wintertime is a great time to embrace a warm sweet home.
In fact, the IRS has made this a timely occasion to build up tax credits while simultaneously trimming down utility bills. Those who take advantage can keep things cozier through the cold months and more efficient all year long.
The Residential Energy Efficiency Property Credit (expires Dec 31, 2023)*: Installing alternative energy equipment may qualify for a 26 percent tax credit. Equipment includes solar electric panels, solar water heaters, geothermal heat pumps, small wind turbines, fuel-cell stacks or qualified biomass-fuel stoves (e.g. wood or wood-pellet fuel stoves).
These energy-efficient systems offer a variety of features and benefits, and accommodate different needs. To find out more about how they work, inquire with local solar energy dealers, contact a manufacturing plant or talk to a local HVAC contractor. Consider an online search for “renewable energy providers near me” to get the ball rolling.
Remember, tax credits can reduce one’s taxable income only in the year the credits are offered. They are not issued as rebates, refunds or checks. However, if a homeowner spent $20,000 on energy-efficient upgrades, the credit could be as high as $5,200. That’s a notable reduction in taxable income.
Also, search online for other energy incentives from your state government or local municipality. For example, credits or rebates at the local level may be available for tax filers who use biofuels for farming or irrigation, or invest in energy-efficient small businesses.
Even with no tax credit, there are additional home fix-up projects that make good economic sense while easing the nip of Jack Frost. For example, replacing old furnaces can bring efficiency up to 98.5%, compared to as low as 60% for some legacy systems. And for much smaller budget items, things like draft guards on doors, insulation film on windows and weather stripping can make a noticeable difference.
It’s impressive how something as simple as a guard along the base of an external door (or a door that leads to a garage or porch or mudroom) can really keep out the cold air and help with home comfort.
There’s a lot to be said about updating one’s home and staying in it for the long term—the sweeter it becomes, the more valuable it can be. Compared to the effort and investment of moving into a new home, a bit of sensible remodeling doesn’t seem so daunting.
Time is limited on the government incentives, but making energy usage more efficient pays benefits year after year. If budgeting and timing aren’t aligned, Bank of Colorado can help with Home Equity Loans and Lines of Credit.
Make home-sweet-home a little sweeter with Bank of Colorado
*Rules and stipulations apply, always consult your tax advisor for more information. This tax credit, at the time of publication, is scheduled to expire after December 31, 2023. Fuel cell property has a maximum IRS tax credit tied to power capacity—$500 credit per half-kilowatt. Source: IRS Newsroom, “Energy Incentives for Individuals: Residential Property Updated Questions and Answers,” IRS, https://bit.ly/IRS_energy, data pulled Dec 16, 2021.