Going Green: Money for Eco-Friendly Upgrades from Uncle Sam
Money from Uncle Sam? Yes, indeed! According to the Alliance to Save Energy, you could save $500 on your 2007 taxes with the right renovations to your home. Alliance President Kateri Callahan says,
"Homeowners who make certain energy-efficiency home improvements by
December 31 can cut their 2007 federal income taxes by up to $500." I actually suspect that she underestimates what you can save; however, she may be assuming that the majority of us in the market for renovations aren't ready for really big ticket items.
However, there are some upgrades that you might already be considering, like that new air conditioning system. You might want to include a few tweaks that make your upgrade as energy efficient as possible, and get some money in your pocket as a reward.
According to NeutralExistence.com, you can get tax credits for all of these renovations:
- $50 for an advanced main air circulating fan;
- $150 for a highly efficient furnace or boiler;
- $200 for energy efficient windows;
- $300 for a highly efficient central air conditioner, heat pump or water heater.
Your biggest bang for the buck? If you install solar panels, solar water heating, or fuel cell power plant equipment, you can qualify for a 30 percent rebate up to $2,000.
You should also look into your state and utility rebate programs. Often, for fairly simple changes, you can see some money in your pocket. Many utilities now offer money to the homeowner for upgrading to a programmable thermostat, for instance. It can save you money, keep your home more comfortable and get you a rebate check from your electrical company. It's a nice combination.
Another innovation is the Energy Efficient Mortgage or EEM. An EEM is still a mortgage loan; you can get one for either new home purchases or to refinance an existing home. However, EEM's can add an additional 15% of your home's appraised value to the principal of a new loan or refinance, often at no additional cost and sometimes at a better rate. I've actually blogged about these before, as a way to get a bigger or more expensive home and still qualify for the mortgage.
Another way to go if you need to finance your renovation upfront is a home equity loan. I recently blogged on these as a method of getting into the stock market and have an interest deduction. In the US, if you are getting the home equity loan for a qualifying home renovation, the interest will already be tax deductible. However, another approach with a green renovation is to take any savings you get and put that directly into the loan. It's a great way to pay it off more quickly.
More on going green on the weekend.