If you’re building or renovating green, or are even thinking about it, there are some big tax incentives for you. You need to pay attention if …
- You build green.
- You built or bought a green home anytime last year or plan to this year.
- You renovated or plan to reno a home last year or this.
- You’ve added renewable energy or a geothermal heat pump.
|REAL ESTATE IMPACT – If you’re selling a home, take advantage of these tax credits and upgrade property features. It’ll help your project P&L. BE SURE TO MARKET THE UPGRADES YOU MAKE. Most existing homes won’t have high-efficiency features, and this will make yours a standout. |
IF YOU BUILD GREEN, ABOVE-CODE HOMES …
Congress reinstated the Energy-Efficient New Homes tax credit of $2,000 for any NEW HOME that exceeds the 2006 energy codes (heating and cooling) by 50 percent. If
you’re building a number of homes with above-code features, this could add up quickly and offset features like high-efficiency HVAC. Many of my clients routinely BUILD to a HERS-rated 55 (más o menos), and these homes often teeter on the fence for this credit.
And manufactured housing is quickly losing its stigma as cheap and shoddy. In fact, it’s becoming the preserve of deep-green building, and the tax credit applies to these units, too.
Check in with your HERS energy rater to see if any of the homes you built this year or last apply for this tax credit. (Yep, it’s retroactive.) Your HERS energy rater will provide you with the necessary docs to hand to your tax preparer.
IF YOU’VE ADDED OR WILL ADD RENEWABLE ENERGY OR GEOTHERMAL HEAT PUMPS …
Not only is solar PV sexy-looking, the 30 percent tax credit it allows can take the sting out of a system purchase. Whether you get this tax credit depends on the type of ownership you purchased your system under.
If you have a “power purchase agreement” (PPA), your solar provider likely assumed the tax credit. But if you bought your system, it’s probably yours. Discuss this with your solar provider because NOW is the time to get those docs together.
“Small wind” systems are like Bigfoot – widely discussed but rarely seen. I had a client last year, in fact, who almost pulled the trigger on a small wind system, and the utility told us we were their first urban case study. In any case, the same rules apply to wind as to solar – a 30 percent tax credit to help offset the cost.
And if you really went for the gold and installed a geothermal heat pump, the 30 percent tax credit applies here, too. No upper limit on any of these, and that’s tasty. Not only that, but the solar PV credit is here to stay through 2022, though on a declining scale. The time to grab that is NOW.
IF YOU’RE REMODELING AN EXISTING HOME …
And can work in green features, there’s money for you, too – 10% of your cost up to $500. While it’s not a fortune, it’s a sweetener for up to $5,000 in energy-efficiency upgrades. Things like …
- Insulation & air-sealing
- New heating, cooling and hot water systems
- New doors, windows and skylights
- ENERGY STAR-certified roof
While I don’t see lighting specified, I’d have zero issue justifying that as a complying cost. Changing out lighting can make a huge difference in energy use – the intent of the tax credit. I routinely see scores of recessed can lighting in existing homes with incandescent light bulbs, not high-efficiency ones. It’s an easy thing to upgrade, and now there’s money (this credit) to help offset that.
|REAL ESTATE IMPACT – If you don’t have the timeline or band width to make efficiency upgrades (and milk these credits), market the property as “tax credit-ready”. It’ll get buyers’ attention. But be sure you’re correct before you do. Truth in advertising is the best long-term success strategy.|
Work with your green-building pro to max this out. And reach out anytime with questions or concerns. I’m here to help.