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Americans are expected to spend an annualized $134 billion on home improvements in the first half of 2013—which represents double-digit annual growth over the fourth quarter of 2012.¹ Those looking into environmentally minded home modifications may get a boost from Uncle Sam’s tax incentives. Here’s how:²
Tax credits for Energy-Star-rated home additions have been extended through 2013. This means these types of improvements may be eligible for a 10% tax credit up to $500, excluding installation costs. This is a lifetime limit however, so if you have taken the credit in the past, your savings may be reduced.³
As for what qualifies, improvements must be to your primary residence and they must be found on the “Federal Tax Credits for Consumer Energy Efficiency” list. The list includes additions under the categories of biomass stoves, heating, ventilating, air conditioning, insulation, roofs, water heaters, windows, and doors.
But what if you want to be even more environmentally friendly? If you install an alternative energy source for your home, such as a geothermal heat pump, a small wind turbine, or a solar-powered energy system, you may be eligible for a rebate of up to 30% on the price. That means you potentially can get a third of your money back. And unlike other tax incentives, this one applies to both principal residences and second homes. ⁴
Installations aren’t the only way to make tax-friendly improvements to your home. What about the tax benefits of clearing some techno-clutter?
When you donate your used electronics, you potentially can deduct the fair market value of each piece, which you determine. (To get an idea of fair market value, you can consider looking at what similar items are selling for at various online auctioneers.) Donating old electronics can help you save space, not to mention helping someone in need.⁵
More and more homeowners are looking into the benefits of energy-saving home improvements. If you opt to “go green” this year, don’t forget to consider what tax breaks may be available. Tax laws are constantly changing, so before committing to an improvement project, consult legal or tax professionals for specific information regarding your individual situation. Also, the information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2013 FMG Suite.
This article is for information and educational purposes only and does not necessarily represent the opinion of Protective Life. Protective Life did not assist in the preparation of this material. For information about Protective Life and its products and services, visit www.protective.com.
Protective and Protective Life refer to Protective Life Insurance Company (PLICO) and its affiliates, including Protective Life & Annuity Insurance Company (PLAICO). FMG Suite is not an affiliate of PLICO and is responsible for its own financial conditions and obligations.