What’s the best way to get some IMMEDIATE ROI on your home? Make some energy-related improvements.
Some may think changes to house plans like updating the kitchen or adding a deck are the best way, but that approach only pays dividends when you sell your home. Make energy upgrades and you could not only BE green but SEE some green when you file your 2013 taxes.
Here are four bankable home plan improvements that not only stand to enhance the value of your home when you put it on the market, but also allow you to take advantage of tax credits on this year’s tax bill.
Insulation + Sealing
Based on Energy Star’s estimations insulating and sealing a home’s “envelope” saves 20% on heating and cooling expenses. Windows, dryer vents, and stovetop fans represent a few sources, where air seeps into the home.
Currently, tax credits for home sealing and insulation are valid for purchases made before December 31, 2013. The tax credit covers up to $500 on 10% of the insulation cost. Authorized insulation such as spray foam, caulk designed to air seal, weather stripping, and house wrap are acceptable as long as the product includes a Manufacturer’s Certification Statement.
Windows, Doors and Skylights
Energy Star-qualified windows must include a double pane glass with an air or gas filled space in the middle. Certain energy star windows are comprised of three panes for maximum energy efficiency and sound insulation. Skylights and doors also qualify for the tax incentive.
Energy Star-qualified windows are eligible for the 10% U.S. tax credit. The limit is up to $200 for windows with differing caps on qualified doors and skylights. The purchase deadline for windows, doors and skylights expires on December 31, 2013.
Solar Water Heater
Heating water makes up about 15% of the average U.S. household’s energy consumption. Solar water heaters rely on the sun’s thermal energy to produce hot water. The caveat is that these water-heating units rely on a conventional hot water heater for back up. Homes with a solar water heater have been estimated to conserve operating costs by 90%.
An eligibility requirement for the solar water heater tax credit is that the primary, residential property must attain at least 50% of its energy from the sun. The tax credit covers up to 30% of the solar water heater as well as the installation. This tax credit does not have an upper limit.
The solar water heater tax credit is applicable for indoor use only and cannot be used for a hot tub, Jacuzzi or swimming pool. The expiration date of the tax credit is December 30, 2016.
Geothermal Heat Pumps
Geothermal heat pumps, an energy efficient alternative to standard heating and cooling systems, last for as many as four decades. For any household that upgrades to a geothermal system, a 5 to 7-year return on investment is normal. Some realtors calculate geothermal heat pumps when factoring in property value. However, this depends on the city, state and local real estate market. You stand to save between 30-70% on heating and cooling costs with a geothermal system.
Homeowners qualify for a 30%, unlimited tax credit until December 31, 2016. Because installations are inclusive of the tax credit, only Energy Star -certified geothermal contractors have the credentials to design these heating and cooling units.
While there is no precise formula for calculating how energy efficient home plan updates drive up residential property values, all of the aforementioned improvements render a return on investment in energy savings and an energy tax credit before they expire. What are you waiting for? Which one will you do this year?
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