Perhaps you’ve read about the tax credit for window coverings, but that tax credit just tips the iceberg of goodies that the government provides to homeowners who make energy-efficiency improvements to their homes. These energy-efficient home upgrades also help you save money on your energy bills each month. In this article, we cover the top ways to reduce your energy and utility expenses and apprise you of the tax credits available to you for making these energy-efficient updates.
Spend Less on Water
Before we dive into the tax credit for window coverings, let’s consider the many ways a homeowner can reduce utility expenses in the long term. If you want to spend less on water each month, consider investing in a water well at your home. Hire one of your local well drilling businesses to drill and install a water well, so you can access unlimited potable water.
Having a private water well at your home lets you draw as much water as you need when you need it. You won’t need to deal with city water restrictions or shortages during times of heavy use. Because your home relies on its own well, you only need to keep your well pump in good working order and regularly test your well water just as the city water treatment plant tests its water sources. When carcinogens appear in the water, you need to treat them to bring them into safety range.
Although digging a well costs a bit upfront – about $5,500 – you never again pay a monthly water bill. The average monthly water bill in the U.S. costs $70.93 per month. Your state of residence may have a higher or lower cost per month, but in most areas, the homeowner recoups the cost to drill the well within six years. If your property can access the water table or sits above an underground aquifer, this option could result in major utility savings for you.
Limit Plumbing Blockages
Make it easier for the plumbing in your home to work properly with regular maintenance. Regular rooting of the plumbing lines and septic tank pumping, also called cesspool pumping, results in better plumbing performance. Hire a residential and commercial septic tank services firm to pump, clean, and sanitize the tank. This might sound like an odd way to save money, but avoiding plumbing clogs, leaks, and backups reduces your water use and prevents damage to your home.
Examine your plumbing pipes and faucets each month. Look for leaks, worn washers, or dripping faucets. Each of these small issues could turn into a big problem if you don’t address them quickly and repair them.
Keep the Air Clean
We’re still getting to the tax credit for window coverings, but first, have your home built before 1980 checked by an asbestos inspection company. Up through the 1970s, the construction industry regularly used products containing asbestos in insulation and ceiling tiles. Many businesses went through asbestos inspections as soon as scientists and medical providers documented the dangers of the material. The Occupational Health and Safety Administration (OSHA) requires businesses to test for this substance, but homeowners of houses built during the height of asbestos product use should, too.
If found in your home, you need to have the asbestos safely and professionally removed. Referred to as asbestos abatement, this process removes the offending materials and debris from them using properly attired, professionally trained abatement workers. Although it will cost money to have this removed, it can save you money on medical costs and energy bills.
Asbestos exposure can cause numerous health problems, including lung cancer, mesothelioma, cancer of the larynx and ovary, and asbestosis. Long-term exposure increases the chances of developing one of these diseases, so immediate removal using proper methods protects your health and can help reduce potential medical costs. On the energy front, today’s insulation options use safer, more effective materials that provide better insulation for your home, which helps reduce energy use and utility costs.
Keep an Eye Out for Worthy Renovations
You don’t need paving companies to pave the way to savings from energy-efficient upgrades. One of the top ways to upgrade your home for improved energy efficiency comes from replacing old windows and doors with double- or triple-pane Low-E windows. Here’s where that tax credit for window coverings we mentioned earlier comes into play. You can claim this tax credit on any installation of exterior windows or skylights that carry the Energy Star Most Efficient certification designation.
The tax credit applies to qualified energy-efficient home improvements, including windows, doors, and home energy audits. We’ll tackle the home energy audits in a separate section, but let’s consider how you can qualify for a tax credit of up to $3,200 for improvements to your home, made after Jan. 1, 2023, through the end of 2032. The maximum amount you can claim for windows totals $600 and for doors equals $500 total with a maximum of $250 per door. The tax credit equals 30% of the qualified expenses.
Home Energy Audits
Having your utility company or an independent source conduct an energy audit can spit ways to save money. An energy audit considers the expenses you make each month on all energy sources and the home’s energy efficiency. It examines the doors, windows, insulation, ventilation, and other areas prone to drafts. This audit also considers the plumbing and wiring.
The resulting report from a comprehensive energy audit provides you with a plan for items to upgrade, such as windows, that would result in a more energy-efficient home and less costly energy bills. The rules for claiming this tax credit work the same as the windows and doors; the audit takes place between Jan. 1, 2023, and the last day of 2032. The maximum credit you can claim each year comes to $150 for a home energy audit.
Rules apply about home energy audits and who can conduct them. Your audit only applies to the tax credit if conducted by a qualified home energy auditor. This individual must have received a certification from a program listed on the Department of Energy certification programs for the Energy Efficient Home Improvement Credit and must have obtained that certification before conducting the audit. Auditors who were certified under the supervision of a qualified home energy auditor qualify.
The audit must include an extensive written report and inspection document that estimates the energy use of the home and the cost savings that home improvements would make. It identifies the most “significant and cost-effective energy efficiency improvements” for the specific home. The report must meet with industry best practices, including stating the auditor’s name, employer identification number (EIN), and a statement of the auditor’s qualified certification program, including its name.
Heat Pumps, Biomass Stoves, Air Conditioners, and Heaters
Each year between 2023 and 2032, you can also take a tax credit of up to $2,000 for home improvements involving the installation of qualified central air conditioners, heat pumps, biomass stoves, or biomass boilers. Each of these devices reduces the home’s draw on non-renewable energy and helps transition it to renewable energy. That makes your home less energy dependent and helps move the U.S. to a less energy dependent state. Items like biomass pellet stoves, bio-fuel boilers, and stoves, use easily obtainable domestically produced fuels that come from corn, soy, and other crop resources.
With respect to heat pumps, biomass stoves, and boilers, to qualify for the tax credit, the item must score a thermal efficiency rating of at least 75%, which means it meets the highest efficiency tier of the Consortium for Energy Efficiency (CEE). The tax credit also lets you claim the cost of installation labor. A qualifying heat pump can use either natural gas or electricity and the credit does include heat pump water heaters.
Further Facts on These Tax Credits
Each of the potential tax credits has a few things in common, whether the homeowner replaces windows, doors, stoves, heaters, heat pumps, water heaters, etc. Before claiming the credit, you have to subtract any rebate, subsidies, or financial incentives from the qualifying property expenses since it adjusted your purchase price. The tax credit only applies to new equipment, so you cannot purchase used items and claim the tax credit.
Only updates to homes located in the U.S. qualify for the tax credit. It has to be an existing home; you cannot apply the tax credits to a newly built home/home under construction. To claim the tax credits, the home must be your primary residence, not a vacation home or rental property. That means landlords can’t make updates to each rental home and claim these credits, but a landlord could make updates to their own home they live in full-time and take the tax credits there.
Invest in Accessibility
Now that you know about the tax credit for window coverings, keep reading on to learn about other ways to decrease energy use and increase your home’s utility. Prepare your home for your older years now by installing an elevator if your residence includes more than one floor or level. A quick search online typically provides a few results for an elevator maintenance company that also handles designs and installations. If your home features a front and back stairway, consider installing a lift on the rear staircase to preserve the aesthetic of the foyer and entry door.
Keep Your HVAC Efficient
Contact your local air and heating company for an HVAC inspection and maintenance visit. Every HVAC needs annual maintenance to keep it running at peak efficiency. Your local HVAC professional can clean the system, change the air filter, clean the ducts, and repair any small issues that they spot. This keeps your energy bills lower by catching problems before they grow large and maximizing the productivity of the HVAC system.
As mentioned in the above discussion of tax credit for window coverings, switching to biomass or biofuel heaters can save you money on energy bills and net you a tax credit. It can also end your dependence on the variable fuel costs of your local heating oil company. Biofuel costs remain much more stable than natural gas, propane, or even butane.
Work With Professionals
Of course, as we always recommend, you should work with professionals in your local area to complete this energy efficiency upgrade work. Your local HVAC company can help you switch your heat and air conditioning system to a more efficient design. Installing a smart thermometer can result in major savings by allowing you to create scheduled temperature changes so your system automatically switches off when you leave for work or drops the temperature to a lower degree at night while you snuggle under blankets.
Consider upgrading your landscape with hardscapes that increase the yard’s utility and help you save money in the long run. Install a patio with an outdoor kitchen, so in spring and summer, you can cook and eat outside. Doing so eliminates the rise in temperature in the kitchen that makes your air conditioner work harder. Cooking outside goes far beyond grilling, so contact a local landscape architect to get started on an outdoor kitchen design for your deck or patio.
The local hardscaping company can install patios, driveways, retaining walls, and much more. Creating pathways through the yard and diverting drainage with retaining walls can help eliminate erosion in your yard. It also increases the home’s curb appeal, which adds to the overall home value.
Getting Started with Home Improvement Tax Credits
The government wants to encourage U.S. homeowners to make their homes more energy efficient. By offering a tax credit for window coverings and other home updates, it encourages these updates. While some home upgrades can cost a lot of money initially, making the changes can save you money in the long run. Applying for the tax credit helps ease the burden of the upgrades and staggering the improvements to take the credit for multiple years can help save more money.