Tax Tips: Save Some Green by Going Green
It is said that there are only three things in life that you can never escape, no matter how hard you try – change, taxes and, finally, death. Well, that being the case, you can always get the better deal off these things than to be frustrated about your lack of control.
Let’s start with the taxes – the thorn in the side of so many income earners, home owners and prize winners. Did you know that you can actually save on your taxes come April 15 by adopting a greener lifestyle? You may think of it as getting one over the IRS while doing your share for the environment. You can decide which gives the most personal satisfaction.
First, you can undertake basic home improvements. The trick is using products with the Energy Star label. For the uninitiated, the Energy Star is the international standard adopted by countries in the United States, Canada, Australia, New Zealand, Taiwan and the European Union countries for rating energy efficient consumer products. Said products can range from computer items and kitchen appliances to insulation and other materials for home improvements.
Products with Energy Star labels save 20 to 30 percent on energy costs. The best thing, however, about the products is that you can avail of tax credits of up to 30 percent on their costs but not more than $1,500. For example, if you purchased water heaters and storm doors with the Energy Star label for $5,000 in cash, you will be able to refund $1,500 in tax credits, if you qualify, that is.
Second, you can get a step up in these tax credits by undertaking major home renovations. Sure, you will be spending a greater amount of money but you will also be able to avail of higher tax refunds when the time comes for them.
There are a few criteria before you can be eligible for the tax refund. The most important of these criteria is that your major renovation should be able to generate electricity, which means that only the installation of wind turbines, solar panels and geothermal heat pumps will qualify as tax refundable.
The good news is that there is no ceiling to the amount of the refund in terms of the dollar amounts. The cap is on the percentage rate of the refund, which is set at 30 percent of the total cost of installation. For example, if your newly-installed solar panels cost $10,000 total, then you may be eligible for a $3,000 tax credit on your tax returns.
Third, you can purchase a more fuel-efficient vehicle. Yes, the federal or the state government provide for a tax credit if and when you lose your old clunker, sentimental value or none. For example, the Chevrolet Volt will cost $40,000 on the tag. This price will go down once the maximum tax credit of $7,500 for green cars is put into the equation.
Indeed, it is not necessary to demolish your home and then build a new one to make it more energy efficient. It is, however, one of the ways to go green and save on taxes but not everybody can do it especially in the housing bust. Often, all you need to do is start with the small things and build your green lifestyle from that point.
