Four Energy Upgrades that Cut Your Taxes
If you’re looking to drop some tax cost this coming year, consider these ways to save both energy and taxes at the same time:
Buy an Electric or Hybrid-Electric Car: The new models of electrics and electric hybrid combos are averaging 90-100mpg. Some of the more popular models include the Nissan Leaf, the Ford C-Max, the Prius Plug-in hybrid, and the Chevy Volt. Driving one of these cars saves a huge amount of fuel energy, and as a bonus, it comes with thousands of dollars in state and federal tax rebates. Check with your individual state’s tax codes for more information.
Buy an Energy-Efficient Home: There are now Energy mortgages that allow you to buy a home and finance the energy upgrades directly into the mortgage. This saves taxes by allowing all of the interest you pay on those upgrades to be added to your mortgage interest deduction on your income taxes. You can also choose to make energy efficient upgrades to your existing home, and then finance these upgrades in an energy-efficient home-equity loan.
Add a Power Generator: Adding solar panels, wind generators, geothermal heat, or other energy-generating devices to your home will come with a handy tax rebate at the end of the year. The best way to do this efficiently is to work with a contractor who understands your local climate and the most effective energy sources for the area. Once installed, be sure to check for both state and federal rebates, as there are a number of both depending on the state. On your annual income taxes, you will fill out the form for the Residential Renewable Energy Tax Credit.
Make Your Home More Efficient: Choosing an energy-efficient appliance or technology to upgrade your home is one of the ways to save energy and money that requires the smallest investment up front. This credit is available on several items that will make a huge difference in your home energy use. These items include new roofs and insulation, heat pumps and air conditioners, and boilers and hot water heaters. The full list can be found on the IRS website under the Residential Energy Efficiency Tax Credit.
If you’re unsure of the best choices to make regarding your personal home and its energy consumption, many utilities will provide free energy-efficiency checkups to help guide you toward the most effective upgrades for your personal situation. Once completed, these upgrades are qualified for the Residential Energy Efficiency Tax Credit. It works as a personal tax credit on your annual income taxes.
Check with Your Utilities: Often, local utilities will also include rebate incentives when you choose energy-efficient items. Doing so may offset the sales tax and possibly even more on a new refrigerator or washer/dryer, or even a new set of compact fluorescent light bulbs. Each utility is different, so it’s always a good idea to give them a call and see what energy-saving incentive specials they have. They’re also great at recommending the most common energy upgrades for your local area, to help you make good choices in saving energy, and saving your hard earned dollars.
