The green home improvements that could save you thousands - and how IRS can cut the bill
The Taxman is reminding homeowners about energy efficiency credits Homeowners are eligible for rebates on solar panels, heat pumps and more Benefits form part of last year's Inflation Reduction Act passed in 2022
Homeowners looking to give their properties an eco-friendly makeover stand to save thousands of dollars thanks to a host of Government tax credits.
The Internal Revenue Service (IRS) is reminding taxpayers they can qualify for thousands of dollars on green upgrades which include installing a heat pump, solar panels and insulation systems.
The benefits form part of the Inflation Reduction Act passed in 2022 which offered a $9 billion rebate package aimed at incentivizing Americans to boost their home efficiency.
Owners can save 30 percent on the cost of installing solar panels on their roof, while motorists can benefit from a $7,500 tax credit on certain models of electric cars.
The Internal Revenue Service (IRS) is reminding taxpayers they can qualify for thousands of dollars on green upgrades which include installing a heat pump, solar panels and insulation systems
They can also claim a 30 percent tax credit on a heat pump - up to $2,000 in a single year. A heat pump can replace both an old air conditioning unit and a gas furnace as it can function as both.
Similarly, investing in insulation or more efficient windows and doors comes with a tax credit of 30 percent - to a cap of $1,200.
And taxpayers can even qualify for a credit worth up to $150 if they just commit to a $500 home energy audit.
IRS guidance dictates that the audit must identify the biggest energy efficiency improvements including a specific estimate of the energy and cost savings to each improvement.
Read More
How long does it REALLY take to save money on an electric car? They're more expensive to buy but supposedly cheaper to run yet experts warn it can take up to a DECADE to break even - as EV drivers say they regret investing
Renters may even be able to claim some credits as well as second homeowners - though landlords are not eligible for the break.
Many of these projects come with hefty upfront costs - but experts insist they are a worthwhile long-term investment.
For example, homeowners typically pay around $20,000 to install a six-kilowatt system for a property, according to Kraig Edelman, CEO of Illinois electrical firm Edelman.
However, the 30 percent Federal Solar Investment Tax Credit (ITC) reduces the upfront average price to $14,000. Some states also offer their own solar tax credits.
Architect Pam Hutter, who runs Hutter Architects, estimates solar panels could save an average household around $1,200 in electricity bills each year. It means it would take an owner around 12 years to break even on the upfront installation costs.
Hutter told DailyMail.com: 'I've overseen numerous projects focusing on sustainability and energy efficiency.
'One example was a home where we implemented solar panels, upgraded insulation, and installed a ground-source heat pump. It led to the home's annual energy bills being reduced by 60 percent.'
The White House has been long been plugging eco-friendly home upgrades - but so far many of these products have remained far too expensive for the average consumer.
The benefits form part of the Inflation Reduction Act passed in 2022 which offered a $9 billion rebate package aimed at incentivizing Americans to boost their home efficiency. Pictured: President Biden being shown an electric Chevrolet Silverado pickup truck in 2022
Owners are also eligible for a 30 percent tax credit on a solar panel system - but upfront costs remain expensive to the average consumer
Research by the Department of Energy and Lawrence Berkeley National Laboratory found that just 14 percent of households with residential solar in the US had annual incomes less than $50,000 in 2021.
Similar accusations have been leveled at electric vehicles which cost on average $55,242, Kelley Blue Book says. By comparison, the average cost of a gas-powered vehicle was $44,989 in April.
While these vehicles are cheaper to run in the long-run, experts warned they can also take up to a decade to break even on the initial investment.