For customers looking to make their homes more energy efficient or to switch to electric vehicles, the near future may not be that far off.
Or really in some cases.
Under a sweeping inflation-reducing law passed last year, taxpayers can get big loans for things like heat pumps, solar panels, energy-efficient windows and homemade electric cars.
Advisors and tax experts are asking how and when you can use potential savings. There are income limits, specific types of promotions customers can run, and the way they must apply for credits. Taxes, the consultants said.
“There are many changes [to tax credits], but the biggest will be the energy efficiency credit. She was converted from a lifetime loan to an annuity loan. That means you can get more bang for your buck when you spread your money," said Robert Percissett, financial planner and accountant at Delagify Financial, in an email. You're doubling or tripling the weight."
Such strategies could become increasingly important in a difficult real estate market. With interest rates rising, many homeowners who were locked into low mortgage rates many years ago have stayed put because new home loans are now much less interest-bearing. According to a recent Wall Street Journal report, this has led to a housing shortage. As a result, property prices have not fallen much and interest rates are at their highest in many years.
However, the fact that many homeowners are delaying their move doesn't necessarily mean they need to modernize their existing home.
"If customers have a purchasing decision or home need related to energy efficiency (car, appliances, etc.), I encourage them to consider tax credits," writes Julia Colantuono, owner of One Financial Design, in an email. "I don't think tax credits should necessarily force them to make a choice in all cases, but it might be the deciding factor that ultimately drives them to choose one product over another."
For example, she says people can get discounts of up to $14,000 on hardware and other upgrades.
"I can think of some customers who have received these payments for energy improvements in their homes and have been very happy with it," she said.
As the IRS issues guidance this year on promotions and purchases that qualify for discounts, consumers need not rush.
"Because credit can be extended by ten years, customers have time to thoroughly research and plan for these upgrades, as well as additional upgrades, in advance to maximize credit for those with annual limits," said Karen Ogden, partner at Envest Asset. management,” the email reads.
For example, the requirements for heat pumps are "very specific," Ogden said.
She pointed out that incentives for rooftop solar panels can be great since there's no dollar cap on loans - they account for 30% of the cost.
While rooftop solar panels are eligible for a 26% tax deduction when installed in 2020 and 2021, that rate rose to 30% last year and will only drop to 26% in 2033. , and decreases to 22% by 2034. Energy stating that "there is no limit to the amount that can be claimed."
While that applies to panels, batteries, solar water heaters and ground source heat pumps, it can also extend to the repairs needed to make those improvements -- one customer was able to deduct 30% of the cost of roof repairs, Ogden said.
Windows replacement is also a hot topic for some customers.
"Where I live in South Florida, many of us live in homes that were built before the 2002 Florida Building Code, which establishes shatterproof window requirements for many new builds," said Chris Deodato, founder of WELLth Financial Planning. . "Surprisingly, I've found that most people don't realize they can get a whopping $600 tax credit as a replacement, since the thicker glass in dash windows means almost all dash windows are Energy Star compliant and therefore eligible." have a tax credit." " ".
And for people looking to buy a Tesla Model Y -- especially since the company recently cut prices -- the new incentives could be attractive. However, you must ensure that the vehicle's "final assembly" takes place in North America to receive up to $7,500 in tax credits.
"Starting in 2024, taxpayers will have the ability to lend a point-of-sale dealership to directly lower a vehicle's price," Noah Damsky, a director at Marina Wealth Advisors, said in an email. "This means you don't have to wait to file your tax return to reap the benefits — you can get rebates right at the point of purchase."
According to the Internal Revenue Service, used electric cars are also eligible for tax credits of up to $4,000 or 30% of the price this year, whichever is lower.
However, there are limits on adjusted gross income for those applying for loans to buy new vehicles. For new vehicles, the maximum is $150,000 for single taxpayers, $225,000 for those filing as a head of household, and $300,000 for individuals filing jointly or for a surviving spouse.
"Income limits for married couples are increasing, so a single person may not be eligible today, but if they get married, they may be eligible," Damsky said. "Think of how good or bad the knot can be and how that can affect timing."
