Can I get energy rebates by replacing my windows?
Replacing the windows in your home provides substantial befits. Your home instantly becomes more attractive, more energy efficient, and even safer if you purchase the right high-quality window. However, many home owners are intimidated by the cost of replacement windows so it’s understandable they want to off-set the cost any way they can.
In this article we’ll tell you about the potential ways you can save on your taxes when you replace your windows.
Energy Rebates for Replacing Your Windows
Throughout the past several years there have been many tax credits and rebates available for improving the energy-efficiency of your home. Sadly, at this point, most of those credits are gone. You can still get credit for making certain solar power improvements, but the credit for replacing your windows and roofing expired in 2014.
However, the previous tax credit (called the Non-Business Energy Property Credit) has been extended in the past and may be extended again. It provides a maximum credit of $500, of which, $200 can be credited towards new energy star rated replacement windows.
While energy rebates may not be available for replacing your windows, you can still potentially save money on your monthly energy bills by purchasing new high-quality replacement windows.
Home Improvements Can Lower Your Taxes If You Sell Your Home
Even though you cannot get tax credits for most home improvements, all home improvements can still help reduce the amount of taxes you pay when you sell your home for a profit. This is due to the fact that home improvements increase what’s known as the basis of your home. Your “Basis” is the amount of your investment in your home for tax purposes. The greater your basis, the less profit you’ll receive when you sell your home and the less you will pay in taxes on the sale.
Here’s an example: Joe buys a home in 2002 for $400,000 and then sells it in 2015 for $800,000. From 2002-2015 Joe made $60,000 worth of investments, including a new roof and a set of new replacement windows. This increased his basis to $460,000. If he subtracts the basis from the sale price, his gain from the sale is $340,000. Since Joe is only taxed on the gain from the sale, he has lowered the amount of taxes he has to pay because he increased his basis. In fact, if Joe qualifies for the home sale tax exclusion, he will only pay taxes on $240,000 of his gain.
Energy rebates may come and go, but improving your home will always lead to improving your life. It’s also important to mention that we at Long Fence and Home are not tax professionals and every situation is different, so be sure talk to your tax professional about the credits you may be able to receive.
When you’re ready, we’d love to help you with your home improvement project. Fill out our “Get a Price” form to start your free estimate today. Use promo code “BLOG” to take advantage of our special offers!!
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