And What It Can Do For Your Taxes
Uncle Sam WANTS you… to go green. Sure, we’re near the end of the tax season, but for those who don’t know or are procrastinating, The United States government is offering tax incentives and credits to people who update their real estate with energy-saving technologies and/or buy hybrid vehicles. The kind of technologies that usually save you money, and with an extra tax break… well, that’s just a bonus.
Now there’s no tax break just yet for urban agriculture, so hold off on turning your Boston home rooftop into Green Acres, but there are plenty of options that can save you some cash.
Here’s the rundown and a few things to keep in mind for next year if you already filed your taxes.
If you made your residency the greenest home in your Boston neighborhood, then the energy saving renovations made from last year could save you $1,500 on your tax bill.
Unfortunately, 2010 is the last year for such a huge energy and environmental tax credit, so for those who already filed your taxes… you’re out of luck. The new residential energy-efficient tax break that just succeeded on Jan. 1 is a much more limited version.
Here’s where it gets tricky. Home energy upgrades installed between Jan. 1 and Dec. 31 will give you a tax credit that’s about 10 percent of costs up to a maximum of $500.
Depending on the type of renovations you make, your exact credit could be less. So here are the facts that could help you out.
- 10 percent of costs, capped at $500
- Insulating such home components as roof, doors, and windows
- $300 for air conditioners and heat pumps
- $300 for energy efficient water heaters
- Capped at $200, 10 percent of costs for Energy Star windows
- $150 for high efficiency furnaces and boilers
- $50 for main air circulating fans
Now here’s the bummer for anyone who’s already claimed a total credit of $500 or more on previous energy tax credits since Jan. 1, 2005. The overall $500 tax credit cap will apply to you too.
So if you’ve already claimed that amount or more, you can’t claim any additional real estate energy renovation costs on your 2011 tax return.
But if you’ve received less than $500 over the years on home energy renovations, then you can claim the remaining amount for any improvements you make this year.
Here are the details offered on Energy Star’s website that explains in detail the eligible renovations and credit limits for the 2010 and 2011 tax years.
Now to get more out of your “go green” tax credit, you may want to consider investing in more efficient alternative energy systems for your Massachusetts home.
The Residential Energy Efficient Property Credit equals 30 percent of what you spend on any of these systems below:
- Solar electric systems
- Solar hot water heaters
- Geothermal heat pumps
- Wind turbines
- Fuel cell property
The good news here is there’s no cap on the credit amount for these energy systems. Whatever the 30 percent of costs, is what you get back. That even includes installation and labor to your allowable credit.
Credits for these large energy saving upgrades may be more expensive, but you have plenty of time to consider taking on such a project for your real estate since the credits are available until the end of 2016.
Phoenix Realty offers exceptional Boston property management services for your home, investment, or commercial property. Please contact Phoenix Realty for further information in regards to our specific services offered.
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