As a REALTOR®, you are expected to be the expert on all things real estate—from pricing, up and coming neighborhoods, to negotiating, and even real estate tax credits. Some of the most important tax credits you should be knowledgeable about are those related to energy efficient homes. Your clients could be unaware of the savings potential in buying, upgrading, or building an energy efficient home, and it’s your duty to fill them in! Make sure your clients know about these energy efficiency tax credits:
Non-Business Energy Property Credit
When your client is deciding what upgrades to make to his new home, it’s important to let him know about the non-business energy property tax credit. Homeowners can claim a credit of up to 10% of the cost of certain energy efficient upgrades, including but not limited to qualified insulation, windows, doors and roofs. But, make sure your client knows the maximum lifetime limit of this credit is $500, and only $200 can be allocated to new windows.
Also, be sure to advise your client that not every energy efficient home improvement project counts towards this credit. Before your client buys a new product, tell him or her to check the manufacturer’s website or certification statement to ensure that it qualifies.
Residential Energy Efficient Property Credit
Another tax credit your clients who plan on doing home improvements should know about is the residential energy efficient property credit. If you install any alternative energy equipment on or in your home, you qualify for a tax credit of up to 30% of the cost.
Equipment that qualifies for this tax credit includes wind turbines, solar hot water heaters, and solar panels. The best part? There’s no limit on this credit, so if your credit comes out to more than the taxes that you owe, the balance will carry over to the next year. Unlike other credits, this one does not only apply to the main home you live in. So, if you have clients who are looking for vacation or rental homes, this is the perfect opportunity to help them save money by making energy efficient upgrades.
Energy Efficient New Homes Tax Credit for Home Builders
Some REALTOR® often have clients who are contractors and investors looking for property to build a home. These clients should be familiar with the energy efficient new homes tax credit for home builders. If a contractor receives certification showing the home meets certain energy efficient standards, he or she is entitled to a credit of up to $2,000.
What exactly are the standards that must be met? To qualify, contractors must reduce heating and cooling consumption by at least 50% relative to the International Energy Conservation Code of 2006. But, if homes don’t meet the 50% standard, they can still qualify for a $1,000 credit if they can reduce heating and cooling consumption by at least 30%.
These tax credits could help you close on a deal with a client, so keep these in the back of your mind and inform each of your clients about these incredible opportunities to save money!