We’re getting very close to year’s end, which is a good time to review any tax-related items on your todo list, as well as look forward to next year with a plan in mind to help reduce your taxable income. For many, the 2013 tax year plans may be too late at this point if you don’t have a lot of free cash, but at least going through the options may help you plan for next year. One high priority item for me is to improve my home’s energy efficiency and take advantage of the federal tax credits before they expire this year.
One of the major tax credits that many homeowners can take advantage of is set to expire at year’s end: The Energy Efficiency Tax Credit. This tax credit is a win-win for everyone: you improve the efficiency of your home, lowering your utility bills and get to take a 10% tax credit for the expenses to do so.
Expenses for improving the energy efficiency of your existing primary home. These include Biomass stoves, Insulation, windows, roofing, water heaters, and HVAC. There’s also a 30% credit for geothermal heat pumps, solar energy, fuel cells and small wind turbines. For more details be sure to check out the EnergyStar site. This does not include any installation costs if you pay someone to do the work for you. Do it Yourself!
An Easy Win: Better Insulation!
For me this is a very easy win. When we bought our home last year the home inspector gave us a very simple suggestion: improve the insulation in your attic. Back in the 1970’s when this house was built R-19 was the norm for attic insulation. In our climate that suggestion is now R-49! A huge difference. So a great way for us to lower our bills and make our passive solar heat system more effective is to simply add rolls of unfaced R-30 insulation over the existing insulation. I’ll be taking advantage of my tips on how to save at Home Depot to buy these rolls, then installing them myself. Between saving 8.5% buying gift cards, 2% cash back by buying them on my cash back credit card and a 10% tax credit, I’ll be dramatically lowering the cost to insulate my house. All told, I was originally estimating about $720 in materials after sales tax. Now, if you take all those credits/discounts the out of pocket will eventually be closer to $600. Not bad!
Don’t Forget Air Sealing!
Air sealing is an important part of the insulation process. Before throwing down more insulation you want to use caulk, expanding spray foam and other materials to be sure you don’t have open air gaps to the outside world. Luckily they will also credit your purchases of these materials.
Don’t forget to save your receipts!