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Tax Credits for Home Updates

Wind-Turbine-300x199As your home gets older, and technology progresses, you may find that your energy efficiency is not quite what it should be. You are, essentially, leaking money out your walls and roof. Fortunately, the government knows this, and there are a number of tax rebates, credits, and deductions that you can get to help offset the cost of updating your home to something more energy efficient. If you combine those perks from the government with the energy savings over time, you may end up saving money in the long run all because you invest in your home. Your accountant in Billings, MT explains what the most popular rebates are, and how you can go about claiming them.

 

Tax Credits for Energy Efficiency

Every year the government offers some credits for those who install energy efficient sources of energy. This does not include energy efficient appliances, updating insulation, installing new windows, etc. Those rebates are available, but they often change (for instance, there was a credit available for windows and doors that expired last year).

Geothermal Heat Pump – A geothermal heat pump uses the earth’s natural cool and warmth to help heat and cool the house. During the winter the ground temperature is higher than the air temperature, and in the summer it is cooler. You can receive a tax credit of 30% with no upper limit if you put one in.

Small Wind Turbines – Wind is one of the best natural resources we have available. By installing a small turbine, or turbines, you can help offset your electricity use. Here in Billings, Montana we often get a lot of wind, so this is especially useful in our area. The same credit is available as with the heat pump.

Solar Panels – There are two forms of solar panels available. One is the traditional panel that we see popping up: the photovoltaic systems that convert sunlight into electricity. But there are also solar water heaters. Both are eligible for tax credits of 30% of the costs.

All three of these upgrades to your house can be expensive. But they all offer  30% tax credits. So if the system costs $10,000 (including installation costs), you can get $3,000 off of your taxes when it comes time to file next year. And then if you realize a savings of $1,000 per year that the system is in place, you will be making money after 7 years. Obviously all of that will vary depending on where you live, what type of system you install, and how much it actually costs you.

You can learn more about these systems, what the requirements are, and how to apply by visiting the Energy Star website.

Practical Taxes

Here at Practical Taxes we know all about the energy credits and how you can save money by installing one of these systems. If you need to consult with us to make sure it is going to save you money over time, just give us a call at 406-894-2050. We can even help you get the paperwork together as well.

Practical Taxes is a full service accounting firm in Billings, Montana. We can help with your tax preparation needs, payroll services, business consulting, bookkeeping services, and more.