Green housing upgrades cheer up would-be sellers

Matt and Sylvia wanted to move. With their two children sharing a room, a bigger abode seemed in order. Unfortunately, the housing market in their area was very slow — so they adjusted their perspective.

Their 60-year-old single-family home needed some upgrades, and the couple wanted to make them as Earth-friendly as possible. When Matt and Sylvia mentioned their summer rehab plans to their financial advisor, she noted that energy-efficient home upgrades would be good not only for the planet, but also for their tax bill — potentially.

Qualifying Green improvements

One of the breaks Matt and Sylvia could look into, their advisor began, was the Residential Energy Property credit. In fact, it was right up their alley because the credit was specifically designed for homeowners making qualified energy-efficient improvements to existing homes.

The credit covers a percentage of the cost of all qualified energy-efficient improvements. Examples include replacing their current HVAC systems, swapping out exterior windows and switching insulation products.

For 2011 purchases, the tax break’s aggregate amount is capped at $500. The general rule is that it’s limited to 10% of eligible expenses, though there are additional limits. For instance, the credit for windows is limited to $200 of the $500. Further, to the extent that you’ve claimed the credit in a prior year, you cannot claim it for 2011.

If the couple wanted to take their green improvements to a new level, their advisor went on, how about solar power? The Residential Energy Efficient Property credit was devised to assist taxpayers paying for qualified residential alternative energy equipment, such as solar electricity equipment and hot water heaters — even wind turbines and geothermal heat pumps. This credit equals 30% of the cost of eligible property, and it runs through 2016.

Energy Efficient Vehicle Credit

Matt and Sylvia’s advisor also noted that they could make an energy-related improvement to their garage — or, more specifically, what goes in it. The catch: They’ll need to give up plans to purchase another gasoline-powered vehicle.

The tax code offers a credit for qualified plug-in electric drive motor vehicles. Depending on battery capacity, the credit ranges from $2,500 minimum up to a maximum of $7,500. It runs through 2014 and phases out for each manufacturer after they sell 200,000 vehicles.

Making do

Matt and Sylvia thanked their financial advisor for giving them some upsides to making do with their current home. Plus, by adding energy-efficient upgrades now, they could enhance its resale value when their local real estate market does pick up.

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