Home improvement projects, such as siding replacements, can feel overwhelming and expensive, but when you factor in energy costs and tax credits available for replacing siding, it may be more expensive not to. The last few years have shown many advancements in home technology and insulation. Many times, this factors into energy savings and tax credits. This article will discuss tax credits available for replacing siding and why that translates into costs savings.
Why a Tax Credit?
Why would the government or IRS care about the siding on your house? Mainly because better siding means less energy use. When your siding is old or cracked, cold air can leak into your home during the winter and out of your home during the summer. This means more energy is necessary to maintain the temperature of your home. Due to climate change, expensive energy costs, and geopolitical pressure, the government is working towards an overall energy-use reduction. One way they try to accomplish this is through tax credits and incentives to help homeowners make energy-wise improvements to your home.
What Siding is Needed?
When you are looking to replace your siding, many different products are available. To earn a tax credit, you need to purchase Energy Star certified siding. This siding will improve the insulation in your home and help reduce your energy use. If you don’t buy Energy Star siding, you won’t qualify for the tax credit. Even though other siding may be less expensive to install, it probably won’t give you the energy savings and insulation you need, so will probably cost you more in the long run. Energy Star siding saves you in energy costs and tax incentives.
What Does the Tax Credit Cover?
Several different tax credits have passed through Congress over the last few years, but unfortunately they ended in 2013. This means, current tax credits only cover work done up through Dec 31, 2013. Even if you are looking to replace your siding after that date, you should still choose Energy Star efficient siding. Congress has been known to pass tax credits that retroactively cover work done previously. Even though this is not a guarantee, it would be a shame if a tax credit became available and you did not qualify due to the wrong materials.
What Does a Tax Credit Cover?
According to the National Association of Realtors, the most recent tax credit covers 10% of material costs up to $500. This doesn’t cover labor, but only insulated materials. Talk with a tax professional to make sure the siding and insulation are covered by the tax credit.
How Do You Apply For the Tax Credit?
Keep all your receipts from the home improvement project. Bring these receipts to your accountant or tax professional to fill out the paperwork and apply for the tax credit. They will be able to make sure you used the right materials and that you apply for the right amount.
Related Resource: Cost-Effective Siding
Qualifying for a tax credit is a great feeling on April 15. Use these tips to find out if you qualify and if it is a good choice for you. Increasing the insulation in your home through better siding is a cost-effective decision no matter the tax credit. Talk to your home improvement specialist, as well as your tax professional, to determine what tax credits are available for replacing siding.