Green Tax Benefts & Incentives Part #1

Would you buy a better performing car that will cost you less to own if the government paid you the difference between the car you can afford and the better performing one? Most people would not have to think very long or hard about that answer. The answer is a resounding yes! The question is, does it really work out that way when it comes to homeowner tax credits and incentives?

When it comes to green building there are a number of federal, state and local tax credits and other incentives that may affect building decisions. It is important to understand these tax benefits and incentives early on in the building process so you can properly determine which materials and equipment you may want to install.

Because tax credits and incentives are always a moving target, many builders are not very well schooled on what is available and how it can impact their prospective buyers. The unfortunate thing is the customer is getting cheated out of having the opportunity to decide one way or the other.

For example, there is currently a 30% tax credit through December 31, 2016 for Geothermal Heat Pumps. There is no upper limit on the tax credit. Let’s see how that might apply to the decision you make for the HVAC system in your new home. In an average 2,000-2,800 square foot two story home, a builder can install a HVAC system for approximately $10,000- $17,000. You can certainly spend much more, but you would be overspending. You can pretty much buy the best forced air HVAC system for about $17,000 or even a dollar or two less. This would include a 95% AFUE furnace with full modulating fan, 15 SEER Heat Pump A/C, zone controls, fully programmable thermostats, steam humidifier, etc.. The system would be fully ducted (meaning the return air vents would not just use wall cavities) and all ducts would be completely sealed. In our homes, this is our minimum “builder” standard. However, some builders might put in the cheapest system building code will allow and the cost can be trimmed down to as little as $10,000-$11,000 dollars. If you were to install a Geothermal system, the cost might be 25,000 to 28,000. However, the tax credit is 30% so the final net cost to you after tax credit would be $15,000 to $19,600. If you knew this information, would it affect your decision? My guess is you would at least want to know what the options are so you could fully consider them.

Over the next few days, let’s take a closer look at the tax federal and state tax credits and incentives that are currently available. The review is not meant to be exhaustive, so you may need to do additional research in your area. For sure, if your builder cannot answer questions about tax credits and incentives, keep looking.