Homeowners & homebuyers: Some “green” options expire soonby Tim Manni
Homeowners: Looking for a reason to pull the trigger on that home repair or renovation? If so, here’s a reason: federal tax credits for installing certain energy-efficient improvements expire on December 31, 2010:
The tax credit for efficiency upgrades in existing homes (Internal Revenue Code Section 25C) is available for 30 percent of the cost, up to a $1,500 limit for 2009 and 2010, for the installation of certain types of insulation, windows, roofs, water heaters, heat pumps, air conditioners and furnaces. Details on the kinds of products that qualify and instructions for obtaining the credit are available at www.nahb.org/efficiencytaxcredit.
The advantages of a more energy-efficient home aren’t just limited to homeowners.
Homebuyers: An Energy-Efficient Mortgages (EEM) is another way to facilitate making your home more environmentally friendly. “An EEM is a mortgage that credits a home’s energy efficiency in the mortgage itself,” according to EnergyStar.gov. “EEMs give borrowers the opportunity to finance cost-effective, energy-saving measures as part of a single mortgage and stretch debt-to-income qualifying ratios on loans thereby allowing borrowers to qualify for a larger loan amount and a better, more energy-efficient home.”
The National Association of Home Builders (NAHB) is trying to get Congress to re-institute a tax credit designed specifically for newly-built, energy-efficient homes. The energy-efficient tax credit for new construction expired at the end of last year:
In addition to supporting efficiency upgrades to existing housing, NAHB continues to push for the return of the section 45L tax credit for new, energy-efficient home construction, which expired at the end of last year. The section 45L tax credit was the only federal incentive available for efficiency in new home construction; about 10 percent of all new homes sold in 2009 qualified.
What’s going to hurt the NAHB’s chances of re-instituting the tax credit for energy-efficient home construction — besides the ballooning national deficit — is that September’s new-home sales report showed an increase of 6.6% from the month prior. September marked the second straight monthly increase for new-home sales. While September’s numbers did mark a significant increase, the current rate of new home sales remains significantly below the level it maintained while the homebuyer tax credit was in place; and I don’t expect Congress to extend that again anytime soon.
I encourage homeowners to take advantage of the tax credit for energy-efficient home improvements while it lasts. You only have two more months — don’t wait.