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Greg O'Brien, CPA, CTS
May 19, 2023

How to Double Your Savings with Energy-Efficient Upgrades?

Get ready to transform your home into an energy-efficient haven while enjoying significant savings with the highly anticipated residential energy credit in 2023. This opportunity is exclusively available to personal homeowners and presents a chance you simply cannot afford to miss.

Recent tax law changes found in the Inflation Reduction Act should be looked at as part of your blueprint to tax-free wealth.  Take action today to start reducing your tax liabilities.

How to Double Your Savings with Energy-Efficient Upgrades?

Imagine the joy of upgrading your home with energy-efficient enhancements that go beyond mere savings on utility bills. Thanks to Section 25C, a world of possibilities opens up before you. From energy-efficient windows and doors to advanced HVAC systems and superior insulation, there's no limit to the improvements you can make. In the past, the lifetime credit limit stood at a modest $500, but now, the new law raises the bar to an impressive $1200 per year, without any lifetime cap. This means you can make energy-efficient upgrades year after year and enjoy substantial savings on your investments.

However, here's the key to maximizing your benefits: strategic planning. By strategically spreading out your projects over two years, you can double your credit. Let's say you have a window replacement project scheduled for the end of the year. Rather than completing the entire project in one go, consider splitting it into two parts. Install 50% in 2023 and the remaining 50% in 2024, allowing you to claim a staggering $2400 credit towards that project. With a dollar-for-dollar pretax credit, not only will you be upgrading your home's efficiency, but you'll also be reducing your tax liability significantly.

But that's not all! Section 25C also rewards you for taking proactive steps toward understanding and optimizing your home's energy usage. By conducting a comprehensive home energy audit, you can unlock an additional credit of up to $150. This credit is a recognition of your commitment to enhancing your home's energy efficiency and reducing your environmental impact.

Section 25D Tax Credits!

While Section 25C caters exclusively to personal residences, don't fret if you own rental properties. Section 25D comes to the rescue with its own set of enticing tax credits. This section focuses on energy property upgrades, such as solar installations and charging stations. By harnessing the power of renewable energy, you can qualify for a tax credit of up to 30% of the cost, even if you choose to finance your project. Picture this: even if you put $0 down for a solar installation valued at $10,000, you'll still be eligible for a remarkable $3000 tax credit. Additionally, alternative sources like fuel storage and electric charging stations also qualify for tax credits under Section 25D. Just ensure that any investment you make aligns with your property's needs and financial goals, rather than solely relying on the tax credit incentive.

Claiming these tax credits is a straightforward process, simply done through your regular tax return. However, it's crucial to keep meticulous records of your upgrades and expenses to ensure proper documentation when filing your taxes. This ensures a smooth and hassle-free experience when claiming your well-deserved credits.

In conclusion, the new residential energy credit presents an exceptional opportunity for personal homeowners to make substantial savings while embracing energy efficiency and alternative energy sources. With careful planning, strategic project execution, and an eye for long-term financial gains, you can upgrade your home, reduce your tax liability, and contribute to a greener future. Stay tuned for more information, explore your options, and start reaping the benefits of energy-efficient living today.

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