This week’s insight is a look at how you can get back some of your tax dollars on energy-efficient home renos.
Did you know… 90% of mortgage holders have a rate below 6%. The majority – about 60% – are locked in under 4%. Those are considered “golden handcuffs” in the real estate industry as who would want to move (and effectively refinance) to a 30-year fixed mortgage rate above 7%? What’s more, many retirees have built up hundreds of thousands of dollars in equity, if not already owning their home free and clear.
60%-plus of mortgage holders have a rate below 4%
There’s still a chance to make some extra bucks with your house, though. A new federal program will provide rebates for energy-efficient renovations, which can help bring down the cost of remodels and improvements. Now, if you’re like so many homeowners, you may have doled out a hefty sum from mid-2020 through last year to upgrade your abode. If you have cash left to spare, then the notorious Inflation Reduction Act, passed by Congress a year ago, could be a good deal.
The program within the IRA has provisions ranging from hundreds to thousands of dollars of tax credits depending on the type of enhancement and impact on your home’s energy efficiency. Also, rebates will vary based on your income and what state you reside in. But the upshot is that the incentives can be combined with existing credits and utility offers on items like heat pumps, solar panels, and electric vehicles. With rising energy costs nationwide and rising billion-dollar weather disasters, good ole Uncle Sam wants to incentivize green energy (seemingly at any cost). But you can make this work to your advantage.
Step 1 is to perform a home energy audit, then plan out what renovations you’d like to make to maximize your savings. Next, to figure out what might work for your circumstance, check out free apps such as Pearl Certification’s Green Door and the Rewiring America’s Inflation Reduction Act calculator.
And if you do have your eye on selling a property any time soon, then upgrades can also increase your home’s resale value. We suspect that mortgage rates will eventually retreat toward 6% over the coming quarters, spurring a wave of transaction activity that is lacking today.