The Inflation Reduction Act primarily addresses climate change. However, it presents significant opportunities for homeowners and remodeling contractors through the Energy Efficient Improvement Credit. The tax credit underlines the government's commitment to fostering energy efficiency at the individual household level. We previously covered how the $300 billion Inflation Reduction Act paved the way for the credit. Now we’ll take a deeper dive into the Energy Efficient Improvement Credit and how you can help homeowners leverage it.
Previously referred to as the 25C tax credit, this financial incentive has been renamed and revitalized to encourage homeowners to adopt greener living standards. Here's what the credit offers:
Credit Expansion: Homeowners are now eligible to claim 30% of the costs from qualified energy efficiency improvements, which translates to an annual cap of $1,200. This is a considerable increase from the previous 10% with a once-in-a-lifetime limit of $500.
Home Energy Audits: Audits aimed at pinpointing energy inefficiencies in homes qualify for a credit up to $150.
Duration: The credit was extended 10 years and remains active until December 31, 2032.
Identify Eligible Improvements: Make sure homeowners opt for enhancements that adhere to IRS guidelines. The ENERGY STAR website often provides a list of energy-efficient products that qualify for tax credits. It's a reliable resource for homeowners to identify qualifying improvements. Also, consult the IRS website for the latest updates.
Stress Documentation: Urge clients to keep all relevant invoices from purchases and installations. This documentation will be critical when claiming their credits.
Get Manufacturer's Certification Statement: Offer to assist homeowners by obtaining a signed statement from product manufacturers attesting that a product or piece of equipment meets specific criteria for energy efficiency and qualifies for the tax credit. While not required for tax return submission, it's pivotal for their records.
Navigate IRS Forms: Point your clients to IRS Form 5695 which must be attached to their tax returns to claim credits.
Encourage Professional Consultation: Tax guidelines can be intricate. It's important for clients to seek professional tax advice to ensure they're maximizing their benefits. This also reduces your risk of being held responsible for any misinterpretations or mistakes related to tax credits.
The Energy Efficient Home Improvement Credit isn't just about tax breaks. It's a big step toward living greener. Homeowners can save on taxes and cut down their energy bills. For contractors like you, it's a chance to bring in more business. Homeowners will be looking for experts who know the ins and outs of these benefits. Stay on top of the rules, listen to what homeowners want, and watch your business grow.
Henry offers a range of Building Envelope System solutions for exterior remodeling projects that help contractors and installers deliver on the promise of a weathertight, energy-efficient home. Flashing tape for window and door installation is one of the key components of an effective weatherization system. Henry offers self-adhered, mechanically applied, and fluid applied flashings compatible with our water-resistive barriers and sealants. And a self-adhered water and air barrier, like Blueskin® VP100, can help provide a continuous plane of airtightness to reduce unwanted air leakage.
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Contact a Henry weatherization expert for advice and support on your next job.
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