Let’s Talk Real Estate – March 2023
The Inflation Reduction Act is the most ambitious legislation ever enacted in the US to combat climate change. Among other things, it will invest $369 billion encouraging businesses and individuals to cut carbon emissions through a series of tax credits. If you are a homeowner, you should read this to not only help the environment, but also to receive thousands in tax credits. Starting January 1, 2023, you can claim the following tax credits by installing upgrades in your home making it more energy efficient.
Heat Pumps—These are energy-efficient alternatives to natural gas powered furnaces. They pull heat from the outside and pump it into the house to raise the internal temp, reversing the process to provide air conditioning.
Tax Credit up to $2,000*
Induction Stoves—Gas stoves are getting a bad rap recently for producing emissions right into people’s living spaces. This can aggravate respiratory disease in some people. An induction range uses an electric current and coiled copper wire to deliver more efficient cooking heat than either gas ranges or conventional electric stove tops.
Tax Credit $840*
Windows & Doors—Tons of heat and cold can escape through drafty doors and single-pane windows. Upgrading to energy-efficient doors and windows can make a big difference.
Tax Credit $600* per window and $500* per door. $1,200* annually, there is also a $150 credit for a home audit.
Water Heaters—A little less than 60 million homes use natural gas water heaters which are said to leak around 91,000 tons of methane, which is more destructive that carbon dioxide, so there are incentives to buy electric heat pump style water heaters. Tax Credit $1,750*
Radiant Floor Heat—System of tubing underneath the floor which heats up when hot water is forced through it. Tax Credit $4,000*
Washer/Dryer—Replacing an old washer or dryer with an Energy Star Certified model can reduce your energy usage by 20% per load. Upgrading to a standard electric washer and dryer doesn’t qualify for a tax rebate but upgrading to an electric heat-pump clothes dryer does. Tax Credit $840*
Wind Turbine—If you live on a rural property you may want to take a second look at installing a wind turbine. Tax Credit 30% off a home energy project.
Solar Panels/Home Batteries—Currently about 8% of the homes in US have installed solar panels but increased incentives are likely to drive the percentage up much higher. For the next 10 years there is a 30% Tax Credit, then in 2033 it goes down to 26% then to 22% in 2034. The installation of home battery storage paired with solar panels to store excessive energy also can qualify for the 30% tax credit.
If you’re feeling good about reducing your carbon footprint you might want to consider adding an electric car and charging station to your garage and help the US reach the federal goal of ½ of all cars sales to be electric by 2030. To qualify for the tax credits, they have to have been assembled in North America which currently includes 26 EV’s including Audi, BMW, Chevrolet, Ford, GMC, Jeep, Lincoln, Lucid Air, Nissan, Rivian, Tesla, and Volvo. In addition, cars must cost under $55,000 and SUVs under $80,000. Manufacturers no longer have a 200,000-vehicle sale cap. Tax Credit $7,500**
Whether you are embarking on a major project to increase the energy efficiency of your home or just replacing an appliance, think about how you can help reduce carbon emissions and get the tax incentives for free!
*Benefits vary on your income. Credits are only available to those making up to 150% of the median income in their area.
**For the new car credit, single taxpayers making $150,000 or less, heads of household making $225,000 or less, and households filing jointly making $300,000 or less qualify.