Renewable-energy tax credit laws are great for homeowners (and potential homeowners) who care about saving energy. Tax credits and other incentives are available at the federal and state level, and often at the municipal level, as well. These allow all of use to save the environment while saving money.
There are more and more good tax breaks for homeowners who use energy-saving devices, methods, and systems in their home. It’s good to keep these in mind when you are shopping for a home. What better way to buy a home, than to buy a home that will save money or even get money back to you come tax season!
To help our clients, and in fact, everybody save money while saving the environment, a few of us at Motovo have put together this quick, concise guide to the renewable-energy tax credit.
1. You can get tax credits for things you never thought of.
When most people think about green energy tax breaks, they think about solar and wind power. But you can add doors, roofs, and even insulation to this list as well. The IRS offers credits for things like:
- Energy efficient doors and windows
- Energy efficient roofing
- Qualified water heaters
- Qualified home heating and cooling systems
- Energy efficient insulation
In addition, the IRS and your state or county often offer additional tax credits when you install and maintain a home solar or other “green” power system. Tax credits, refunds, and other incentives will often cover part of your installation expense. These benefits sometimes extend to maintenance costs, or otherwise roll over into the next 1-2 years.
2. How to Get Renewable-Energy Tax Credit for Solar Power–Without Paying a Cent for a Home Solar Power System
Due to government regulations, new business models, reduced materials cost, and the Renewable Energy Certificate trade market (see below), it is now possible for homeowners in many states to have a home solar power system installed free of charge, and even upgraded every 3-5 years!
These programs–often called the “solar lease”–benefit the homeowner, the equipment provider, and the environment. When the equipment provider provides the equipment at no cost, home owners use some or all of the collected solar power for home needs; any excess power then makes its way to the equipment provider, who then sells the surplus to one or more power companies. The home owner may or may not receive the applicable Renewable Energy Credits (RECs).
Home owners who rent home solar equipment often get to keep the extra energy and sell it to their power company or store it in a solar battery for later use. These customers typically receive RECs, as well, as some amount of tax credit related to the cost of the lease.
Finally, home owners can buy solar equipment for a much lower price than even a few years ago. Your iPhone may be partly to thank: Part of the reduced cost comes from the availability of the right kind of glass, which incidentally is used on iPhones, tablets, and most modern touch screen devices.
Anyone with a home solar system can also sell their surplus power to their local power company. In most places, the power company is required to buy this energy. As a bonus, this excess energy is often produced at peak hours, when the electric company charges more–and most pay more–for each kilowatt hour of electricity!
Home owners who buy their solar equipment typically receive the full amount of renewable-energy tax credits for their purchase, and may be able to write off or receive credit for maintenance costs as well. In most states, they can also take advantage of Solar Renewable Energy Credits (SRECS).
3. How Home Owners Make Money Selling Renewable Energy Credits (RECs)
Homeowners typically receive an REC for every 1,000 kilowatt-hours (1,000 kWh) of electricity produced by their solar array. Homeowners can also receive them for generating electricity via wind or other renewable means.
Then home owners can sell their credits to power companies or other companies that must produce a certain amount of their power via renewable means. In most states, power companies must use more and more renewable energy each year.
Unfortunately, most power companies don’t generate much electricity via renewable means. The federal and state governments allow many of them to get around this by use of Renewable Energy Credits. Homeowners who produce electricity via renewable means can sell their RECs to power companies or other companies. These companies can then take credit for renewable energy production, avoiding severe penalties in the process.
You can learn more at the EPA Website:Â https://www3.epa.gov/greenpower/gpmarket/rec.htm
Renewable-energy tax credits aren’t the only way to make and save money by going green. Savvy homeowners can sell Renewable Energy Credits and even sell electricity to power companies. In addition, many state and municipal governments provide other incentives for conscientious home ownership.
Naturally, buying a home that’s already green is a great way to go. But keep in mind that you can buy a home and make it energy efficient, too. A home that has enough of a yard for one or more solar panels or small windmills; a home with an east-west facing and slightly angled roof; and other considerations (such as the amount of large foliage) are all all things the green home owner should look for.
2 Point Highlight
Homeowners who produce electricity via renewable means can sell their RECs to power companies or other companies.
It is now possible for homeowners in many states to have a home solar power system installed free of charge.
