Thinking of renovating your home? Investing in home improvements can help you increase your overall energy efficiency, save money on monthly utility bills, and increase the value of your home – and most importantly, renovations can make for a more enjoyable space for you and your family to live in. Renovating can get expensive, and often the cost holds people back from making the improvements they desire; but if you live in California, you may be eligible for certain tax credits that can ease the costs of your home improvements.
Have you considered energy efficiency? Creating your own energy is a great way to get tax credits, and there are multiple ways to accomplish it. Before you start, check the residential requirements to make sure you’re following the appropriate rules. For example, if the energy you create is going to power a hot tub or pool, it doesn’t qualify for a tax credit. Likewise, some improvements have to be made by the end of 2016 in order to be deducted. For other improvements, you need to choose a certain retailer or appliance with a specific rating to fully qualify. The Database of State Incentives for Renewables & Efficiency shows you programs and incentives for your specific living situation, project, or city.
If you’re interested in making your house more eco-friendly – and the tax credits that go along with it – here are some ideas all California residents should consider:
Solar energy is one of the most popular ways to create a source of renewable energy, and the state of California loves to incentivize people to use it. Solar power can come in the form of panels, photovoltaics, and water heaters. In California, residential consumers who install solar panels can exempt the cost of the panels from their property taxes. In some cases, you can also sell energy back to your power company, to further reduce energy costs. These benefits come on top of existing federal rebates and credits for solar power systems in your home.
Fuel cells convert stored energy into power, or heat, to reduce carbon dioxide output. While these systems can significantly decrease your home’s power use, installing them can be very expensive. To offset the installation costs, you can get up to $500 for each half-kilowatt your fuel cell system produces.
Geothermal energy systems use the heat of the Earth’s core to generate power. These systems require a lot of time and effort to install; fortunately, tax credits will cover part of the cost of supplies, as well as installation, with no upper limit. Your system must meet Energy Star requirements to qualify.
California has plenty of windy regions, and if you live in one of these areas, you have a great opportunity to use turbines to create energy – and to receive tax credits. Many people think of wind energy as only coming from large windmills; but smaller turbines are available for homeowners who don’t have the space of an entire farm.
Replacing and updating your HVAC system is one of the best ways to make your home more energy efficient. Having a trained professional install an HVAC system that matches your needs can save you a significant amount on your monthly bills. In addition, some manufacturers offer rebates to make the systems themselves cheaper. These upgrades apply to fans, biomass (wood, plant fibers, or agricultural waste) stoves, heat pumps, and central air systems.
Installing a new water heater saves energy and money, and can earn you a credit of up to $300. This is especially true for water heaters using propane, natural gas, or oil as a source of power. Unlike some other projects, you can include the cost of installation when you are calculating your expenses.
Adding insulation to your home works to prevent warm or cool air from leaking out of your house. Fiberglass, foam boards, spray foam, and other materials can be partially reimbursed and claimed for a tax credit. You can also get credit for improving the seals around your insulation.
You can claim credits for installing a reflective roof, or painting it with reflective paint, to keep your roof from absorbing too much light and heat. Doing this lowers your personal cooling costs, and your home’s temperature will naturally cool down, leaving you more comfortable in the summer.
Windows, doors, and skylights are another source of leaks in your home. Replacing your windows with versions that meet, or exceed, Energy Star ratings can make you eligible for credits in certain areas of California. When you’re assessing your credit, you can only include the price of the windows and doors themselves; not the price of installation.
With energy costs rising, and increased attention on efficiency, more and more states are offering incentives for their residents to find ways to save energy – and in California, the opportunities abound. Making home improvements may feel overwhelmingly costly at the start, but if you take advantage of the tax credits available (both by the state and federal governments), you can offset the costs of installing new features. Eco-focused renovations help you in the long run, by reducing your energy use and saving you money on your monthly bills – making them well worth the initial investment.
What are some ways you’ve reduced your energy use? How have you lowered your monthly bills?