Can we save on taxes by making some home improvements?
Question of the week: Can we save on taxes by making some home improvements?
Answer: Yes!
Two years ago the WR&MU question was, “Should we get solar panels?” In the answer federal tax credits were covered, at the time of the writing the credit was expiring in 2024, however Congress extended the credit to 2032.
In addition to a tax credit for solar panels, the federal tax code also has an Energy Efficient Home Improvement Credit. This credit allows credits of 30% up to $3200, through 2032, for qualified energy-efficient improvements to your home.
Claims are allowed for various energy efficient improvements, including but not limited to exterior doors, windows and skylights, heat pumps, and water heaters. There are limits as to the maximum credit allowed per unit and overall for each type of improvement, for instance the limit is $200 per door with a total of $500.
As well, for those meeting established efficiency standards, the Energy Star rating, appliances are also eligible for credits. Refrigerators, dishwashers, washing machines, dryers, water heaters and HVAC systems are all eligible if they meet the criteria.
Keep in mind a tax credit is a direct reduction of taxes owed for the year claimed, not a reduction of taxable income. For instance, if your total tax liability for the year is $20,000 and you have $3200 in energy efficient improvements and $5000 for solar installation, your tax liability is reduced to $11,800.
As opposed to a tax deduction, where the total of $8200 lowers your taxable income by that amount.
Did you do any home improvements or remodeling in 2024? Make sure you save those receipts, and if any Energy Star appliances were purchased have the labels and manufacturer certifications.
Note, per the IRS website, for Energy Efficient Home Improvements after 2024 for each item (door, window, etc) the item must have been produced by a qualified manufacturer and you report the PIN for the item on your return.
Final note, we mentioned three different programs, each with their own regulations for eligibility: solar, Energy Efficient Home Improvements, and energy efficient home appliances. Check with your CPA or tax preparer for eligibility of your expenditures and amount available for possible federal tax credits.
Schedule an appointment to discuss your options if you are considering purchasing a new home or property or refinancing an existing one and want to know the mortgage options available to you.
Have a question? Ask me!
The result was fully expected, after the meeting of the Federal Open Market Committee of the Federal Reserve announced it was lowering its benchmark rate by 0.25%. In a news conference after the announcement Chairman Jerome Powell stated that the effects of high prices are still being felt and it will take time for wages to outpace inflation enough for people to feel better about their financial condition.
Other comments from his presser: Our national debt is on an unsustainable path. The Fed’s monetary policy remains “tight,” meaning it anticipates more rate cuts. While on the right path, lower, one report on inflation was higher than expected; regarding rate cut in December, “By December…one more employment report, two more inflation reports and lots of other data, and we’ll make a decision.” Which could foretell a pause in cutting its benchmark rate.
Rates for Friday November 8, 2024: With the Fed rate cut fully priced into the mortgage rate market for several weeks, the only impact on rates was the election; which produced the standard volatility pre- and post-election. Rates dipped yesterday and today as investors sort out the implications of the results for the President, Senate and House of Representatives, with many investors buying on the large drop in mortgage prices (higher rates) of the past several weeks. As a result, conforming rates drop from last Friday for the first time since mid-September.
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:
30-year conforming 6.375% Down 0.125%
30-year high-balance conforming 6.875% Up 0.125%
Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.
At the 11th hour of the 11th day of the 11th month in 1918 fighting stopped between Germany and the Allied Forces after an armistice was signed in Compiègne, France. While the Treaty of Versailles that formally ended the war would not be signed until six months later, the armistice effectively ended the “war to end all wars.”
In 1919, President Woodrow Wilson declared that November 11th would be Armistice Day. On the first Armistice Day besides the parades and speeches to celebrate, there was a brief suspension of business at 11 a.m. In 1938, Congress made Armistice Day a federal holiday.
In 1954, after World War II and the Korean War, acquiescing to Veterans service organizations who had been lobbying for quite some time, Congress amended the 1938 Act, exchanging “Armistice” for “Veterans.” November 11th became a day to honor all veterans of all wars.
I feel it is fitting that our national election day is held days before Veterans Day, honoring those who have served to preserve our liberties, freedom and democracy regardless of who has been elected to serve in our Executive or Legislative branches of government.
Deep gratitude and appreciation for all our veterans who have served our nation, and their families who have endured through their time served, not just on our holiday on Monday, but every day.
