B4 • Friday, February 10, 2023
THE GARDEN ISLAND
thegardenisland.com
TAX CREDITS, REBATES CAN LAUNCH ECO UPDATES Annie Millerbernd NERDWALLET If you’ve been holding off on home improvements, a new law signed last year and now in effect as of Jan. 1, 2023, may provide a fresh incentive. The Inflation Reduction Act, or IRA, includes tax credits and rebates for homeowners who make energy-saving updates to their homes. Credits for improvements like new solar panels, windows, doors and air conditioners are available now, while rebates for larger energy-efficient updates are expected to become available later this year or next year. Here’s what to know about these perks, plus tips to plan your projects. Tax credits for smaller updates The IRA includes tax credits for around-the-house eco-friendly updates. Eligible purchases include energy-efficient windows, doors, insulation, central air conditioners and home energy audits. An IRS fact sheet outlines eligible home improvements. Tax credits reduce your tax liability for the year, says Los Angeles-based certified public accountant Michael DiBernardo. For example, a $500 credit lowers your taxes owed by $500. The IRA allows homeowners a 30 percent tax credit for some energy-efficient updates, capped at $1,200 per year. There’s also a $2,000 credit for heat pumps, heat pump water heaters and biomass stoves. Make the most of it: Combining projects — like new insulation and a heat pump — can get you up to $3,200, says Kara Saul Rinaldi,
Average long-term mortgage rates inch back up this week ASSOCIATED PRESS The average long-term U.S. mortgage rate ticked up slightly this week after four weeks of declines, a possible sign of stability that could draw in home shoppers with spring buying season weeks away. Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate inched up to 6.12 percent this week from 6.09 percent last week. The average rate a year ago was 3.69 percent. The average long-term rate reached a two-decade high of 7.08 percent in the fall as the Federal Reserve continued to raise its key lending rate in a bid to cool the economy and and bring down stubborn, four-decade high inflation. At its first meeting of 2023 last week, the Fed raised its benchmark lending rate by a quarter point, its eighth increase in less than a year. That pushed the central bank’s key rate to a range of 4.5 percent to 4.75 percent, its highest level in 15 years. While acknowledging that some measures of inflation have eased, Fed Chair Jerome Powell appeared to suggest last week that he foresees two additional quarter-point rate hikes this year. Though those rate hikes do impact borrowing rates across the board for businesses and families, rates on 30-year mortgages usually track the moves in the 10-year Treasury yield, which lenders use as a guide to pricing loans.
Even if you don’t usually owe taxes and can’t use the IRA credits, the rebates mean you can still get a discount on energy-efficient updates, Saul Rinaldi says. Make the most of it: It’ll be months, at least, before homeowners can get the rebates. In the meantime, consider a home energy audit to determine which projects to start once the rebates are available. Then work the savings into home improvement plans for this year and next, Saul Rinaldi says. Financing energy-efficient home updates The cost of some home improvements could diminish the IRA tax incentives. Here are ways to supplement financing for your project. w Other assistance. The North Carolina Clean Energy Technology Center manages a database of state and local incentives that includes resources like solar installation reJERRY MCBRIDE / ASSOCIATED PRESS FILE bates and low-interest loan programs. Workers install solar panels on a barn on Aug. 27, 2009, north of Hesperus, Colo. w 0 percent interest credit card. A Rebates to generate big $4,500 tax credit. president and CEO of the energy 0 percent annual percentage rate, Any unused credit carries to fu- savings — eventually and environmental strategy firm or APR, credit card may be just as AnnDyl Policy Group and an advo- ture years, so if you don’t owe good as cash if you pay it off during The “difference makers” in the the no-interest period, says Travis cate of policies that helped shape taxes this year, you can use it later. IRA are two new rebates, KnickerGatzemeier, a certified financial Make the most of it: The tax the IRA. bocker says. One program offers planner based outside of Fort credit will reduce the cost of going up to $8,000 for lowering the Keep receipts for each eligible Worth, Texas. Good or excellent solar, but if your goal is to lower update and add them to your tax home’s energy use and the other your utility bill, first determine forms, Saul Rinaldi says. provides up to $14,000 for electrifi- credit is usually required. w Home equity. If you have eqwhen you’ll see savings. This often cation updates like appliances and Increased credits for solar depends on how much you curbreaker box upgrades. uity, consider a home equity loan panels Unlike the credits, the rebates or line of credit to finance larger rently pay, says Duane KnickerThe IRA also increased the are designed to be offered at the updates. Rates are often lower than bocker, owner of Brower credit for solar installations. point of sale. personal loans and credit cards, Mechanical, a Sacramento-based Homeowners can get a tax credit Low- to moderate-income house- but your home is collateral for the company that helps homeowners for 30 percent of the cost to buy loan. optimize energy use. holds — defined in the IRA as and install solar panels — up from w Personal loans. Unsecured perThe average payback period for those with total annual incomes of the previous 26 percent. And solar panels is six to nine years, ac- less than 80 percent of their sursonal loans are a fast way to cover there’s no dollar limit. If you pay cording to the Center for Sustainrounding area’s median — are eligi- home updates and repairs: Some $15,000 to put solar panels on lenders provide funds the same or able Energy, a policy and research ble for larger rebates than those your house, you can claim a next day after approval. firm. with higher incomes.