Federal and State Tax Credits in Relation to Energy Conservation at Home
Renewable energy and energy saving technology are very attractive to home owners right now. The current state of the economy and the fast depletion of the non-renewable energy are prompting people to become more energy conscious.
There are direct ways to make your home become more energy efficient. These include installing renewable-energy-generating equipment such as small wind turbines and solar panels. These are cost effective especially in rural areas when the only way to get energy is to run power lines from a grid. Solar water heaters reduce the need for gas or electricity to heat homes. You can also buy “green power.” This comes from an electric company that either buys excess power from existing consumer solar reserves are utilizing renewable energy power supplies such as solar or wind power.
You can also make your home more energy efficient, and doing so may not totally reduce the power that you use. These may actually decrease your home’s carbon footprint. These items include programmable thermostats, new insulation installation, and new energy-efficient windows and doors.
There are tax credits available from the Federal and State governments for changing to more energy-efficient resources for your home. The Federal government offers residential renewable energy credits when a homeowner installs solar energy systems, geothermal heat pumps, small wind systems, residential fuel cells, and micro turbine systems. Taxpayers can receive a 30% tax credit when one of these systems is in service before 12/31/2016.
They also have another tax credit called the Home Energy Efficiency Tax Credit. When a homeowner purchases and installs energy efficient products such as doors, heating and cooling equipment, windows, and insulation for use in existing homes, they can receive a tax credit of up to 30%, with a maximum of $1,500 for all purchased items placed into service by 12/21/10.
Almost every state has tax credits and loans available to help homeowners transform their residence to more energy-efficient ones. California allows property tax exclusion—meaning, they will not have to pay the extra taxes associated with improvements onto homes, for attaining and installing solar energy systems by 12/31/2016. These improvement purchases include solar air-conditioners, active solar energy systems, solar heating systems, solar water heaters, and thermal electric systems.
Arizona has a program to deduct the income taxes of taxpayers who sell one or more single-family homes that are energy efficient. This tax credit has a maximum of $5,000 of the sales price and it must be taken within the same year.
New York has property tax incentives too. If homeowners install eligible energy-efficient technology, they will be exempted from real property taxes. Installing this equipment would also increase the value of the home. These tax exemptions include school district taxes, special ad volarem taxes, and several municipal property taxes. This incentive was enacted in 1977.
Hawaii also has an incentive program that was enacted in the earlier days of energy-efficient technology in 1976. Hawaii Energy Tax Credits gives the homeowner an income tax credit of 20% of the equipment costs of a wind powered system and 35% for the cost of solar systems, like water heaters and home heaters.
Every year, more and more people decide to make their homes more energy efficient by using renewable energy resources. This increases the value of a home because fixed utility bills make the home more cost-efficient to live in and the home’s carbon footprint will be also reduced dramatically.