Post on 11-Apr-2017
HOMEIMPROVEMENTIDEAS TOREDUCE YOURTAXES
MICHAEL MORROW
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If you’ve recently remodeled your home then there’s a
chance you can save on your taxes. In some cases, it’s
possible to receive a tax credit for some renovations. If
you haven’t renovated your home but you’ve been
considering it, take a look at the below ideas.
BACKGROUND
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Thanks to Solar Investment Tax Credits (ITC), you
may be able to lower your tax liability by a
significant amount.
According to the Solar Energy Industries Association
(SEIA), “the Investment Tax Credit (ITC) is currently
a 30 percent federal tax credit claimed against the
tax liability of residential (Section 25D) and
commercial and utility (Section 48) investors in solar
energy property” (Issues & Policies).
After you install solar panels on your home, you can
apply the ITC credit to your income taxes. This
benefit may be used for up to 20 years.
At the moment the tax credit is 30%; however, in
2020 it will drop to 26%. By 2023 the credit will only
be worth 10%, and it will permanently remain at that
amount. Therefore, right now is the best time to
install solar panels on your residence.
SOLAR
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Installing a new door or new windows that are
energy-efficient are two simple ways to save on your
taxes.
Make sure that the products you purchase come
with the Energy Star label so that they qualify.
Also, the improvements need to be made in a home
you own—not a rental property.
SIMPLEADDITIONS
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Electric heat pumps, electric water heaters, and air
conditioning systems are three upgrades that can
save you a significant amount of taxes.
Updating your roof and adding insulation are two
other projects that can save you a lot of taxes.
If you’re interested in installing a large system like a
wind turbine or geothermal heat pump, look into the
Residential Energy Efficient Property Credit. Just
like the ITC, this credit is worth 30%.
LARGERUPGRADES
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If you recently purchased your home and want to
make renovations, you can take out a larger
mortgage to help pay for the renovations. The IRS
will let you deduct mortgage interest.
Home improvement loans are tax-deductible as
well.
However, it’s always a good idea to pay for
renovations without using any loan if possible.
While you can save some money on your taxes when
you use the appropriate loan, remember you’re
responsible for the loan’s interest.
OTHER IDEAS
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