The IRS offers some big tax incentives if you're building or renovating green. Now that it's tax-prep time, remember to reach into the IRS goodie bag because something may apply for you.
You need to pay attention if …
You build green, above-code.
You bought a green home anytime in 2015 or this year.
You renovated a home with green features last year or this, or
You’ve added renewable energy or a geothermal heat pump.
IF YOU BUILD GREEN, ABOVE-CODE HOMES
Congress reinstated the $2,000 Energy-Efficient New Homes tax credit 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 high-efficiency upgrades. Many of my clients routinely BUILD to a HERS-rated 55 (más o menos), and these homes teeter on the fence for this credit.
And manufactured housing is quickly losing its stigma as cheap and shoddy, becoming a domain of deep-green homes and buildings. 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 rater should provide you with the necessary docs to hand to your tax preparer.
IF YOU ADD RENEWABLE ENERGY OR GEOTHERMAL HEAT PUMPS
Not only is solar PV sexy-looking, the 30 percent tax credit it allows takes the sting out of a system purchase. Whether you get this tax credit or not depends on how you took ownership of your system.
If you have a “power purchase agreement” (PPA), your solar provider likely assumed the tax credit. But if you bought your system outright, the credit is 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 going to be the first such urban install. In any case, the same rules apply to wind as to solar – a 30 percent tax credit to help offset the first 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 juicy. Not only that, but the solar PV credit is here to stay through 2021, though on a sliding scale.
IF YOU’RE REMODELING AN EXISTING HOME
If you can work in green features in an existing home, there’s money for you, too – 10% of your cost up to $500. While not a fortune, it’s a sweetener for up to $5,000 in energy-efficiency upgrades that you may have spent anyway because of mechanicals systems that failed.
These upgrades include …
High-efficiency heating, cooling & water heating
Insulation
ENERGY STAR-certified roofing & windows
Work with your energy modeler to get this green goodness from the gov. And here's another link for docs to send to your tax preparer. Reach out anytime with questions if I can help.
IMAGES: IRS logo from IRS.gov. Geothermal heat pump from StylePinner.com.