Power Up Your Tax Credits
If living through a pandemic is causing you to consider investing your vacation fund into improving your home, you may want to consider opting for upgrades that qualify as energy efficient. This list includes air source heat pumps, central air conditioning, boilers, furnaces, water heaters, and advanced main air circulation fans. Consider shopping for ENERGY STAR products that use up to 30% less energy and are independently certified to save money and protect the environment.
Tax credits for residential homes and commercial buildings have been extended retroactively through December 31, 2021.
Under the Bipartisan Budget Act of 2018, the renewable energy tax credits for fuel cells, small wind turbines, and geothermal heat pumps now feature a gradual step down in the credit value, the same as those for solar energy systems. Existing homes and new construction qualify, as do both principal residences and second homes. The credits breakdown is as follows:
· 30% for systems placed in service by 12/31/2019
· 26% for systems placed in service after 12/31/2019 and before 01/01/2021
· 22% for systems placed in service after 12/31/2020 and before 01/01/2022
These credits expire on December 31, 2021.
The Charge is on for Electric Vehicles
If you plan on shopping for a new vehicle this spring, consider electric. Although electric vehicles (EVs) are a small percentage of cars on the road now, their presence will be increasing exponentially over the coming years. If you buy a new, qualifying vehicle, you may be eligible for a federal tax break. The tax code provides a credit equal to $2,500 plus an additional amount based on battery capacity that can’t exceed $5,000. Therefore, the maximum credit allowed for a qualifying EV is $7,500.
Be aware that the credit may not be available because of a per-manufacturer cumulative sales limitation, which phases out when a manufacturer has sold at least 200,000 qualifying vehicles for use in the United States. As an example, Tesla and General Motors vehicles are no longer eligible for the credit. The IRS provides a list of qualifying vehicles on its website, so take a look before you buy.
Situations always vary, so check with your accountant or tax expert.
Kelly Haggerty, Partner/Owner of The Haggerty Group in Ridgewood has been practicing as a Certified Public Accountant since 2007.