If you are considering home renovation, remodeling or an addition, now is the time to think green – to save the environment and to earn some very nice tax credits and rebates . It might also be the ideal time to think about replacing your heating and cooling system(s) with a geo-thermal system or super-efficient solar panels . These “big ticket” upgrades have big price tags, but they also earn some equally massive tax credits. They also typically qualify for unique energy efficiency financing. The Economic Recovery Act contains an open invitation to remodel your home with an eye to energy efficiency!
The current recession is making this a good time to remodel for those who can afford it. The number of new renovation or remodeling projects is significantly lower than it was even four months ago. Contractors are finding themselves short on work and without a way to pay their employees or keep them working . As a result, the costs for project management and labor are sometimes as much as 10 or 20 percent lower than usual prices .
The price of several major construction materials has also fallen recently . If you are planning to pave your driveway, for instance, you can take advantage of materials prices that have fallen abruptly in the past few months. The same is true of roofing .
“The new tax credits outlined in the Economic Recovery Act offer Federal Income Tax Credits for remodeling for energy efficiency that are 3 times the amounts offered in previous tax credits.” |
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Lumber costs have been dropping steadily in recent years . Between 12/2003 and 10/2008 lumber prices dropped 11.3%, but in just the period between October 2008 and January 2009 those prices dropped a further 5.3%. Metals prices have also dropped noticeably in that brief 3-month period .
In total, the consumer price index for construction materials and components increased steadily from December 2003 to October 2008 by 17.5%, but between October 2008 and January 2009, there was a decrease of 2.5%, and it has continued to drop from there. This means we are now able to purchase materials at price ranges well below what we were purchasing them at way back in 2008!
The new tax credits detailed in the Economic Recovery Act offers Federal Income Tax Credits for remodeling for energy efficiency that are triple the amounts offered in prior tax credits for energy efficiency. Instead of a measly remodeling credit of $500, you can claim a credit of up to $1,500 . The cap has been eliminated on the amount you can deduct for new energy-efficient windows, as well .
But if you invest in a solar panels system or a geothermal heating/cooling system , you can deduct a full third of the expense in a “super credit” on your Federal taxes. The benefits of energy efficient remodeling can also extend to your state and local taxes.
Many states offer rebates and tax credits for set up of energy-efficient equipment in homes . Many power companies (electric, gas) also offer rebates and special financing options for energy-efficient systems .
For instance, if you live in Wyoming, in an area served by the Black Hills Power Company, you would qualify for a rebate: Residential Energy Efficiency Rebate Program (BHP) – incentives of up to $1,500 on water heaters, heat pumps , electric resistance heat systems or Geothermal heat pumps based on efficiency and capacity . Wyoming also has a Photovoltaic Incentive Program which offers grants of $3,000 or 50% (whichever is lower) to residents who install photovoltaic or hybrid systems.
If you are planning a remodel, you will discover that this is a wonderful time to begin a project and save money. If you can make some energy efficient choices you might also find that you are eligible for special financing, tax credits , or even a rebate. Check with the state department of energy and your local utility company .
