With the fiscal cliff looming overhead in the final weeks of 2012, many American citizens wondered if their lives would be affected by the potential changes heading into the new year. But on January 1, the U.S. Congress passed the American Taxpayer Relief Act of 2012, a law which – among other things – means that millions of Americans will avoid the automatic tax increases they feared.
The fiscal cliff deal also included some good news for home and business owners hoping to make energy-efficient upgrades to residential and commercial buildings. These business and personal tax credits, which had expired on December 31, 2011, will be extended through December 31, 2013. They were also made retroactive, meaning that they can be applied to 2012 projects, as well. Let's take a look at the aspects of this bill relevant to energy-efficiency and see what they mean:
26 U.S.C. §45L Business Tax Credit for New and Renovated Energy Efficient Residences – This states that contractors and developers who build or modify apartments, condos or single-family homes to meet energy-efficient standards will be eligible for a $2,000 tax credit. It's worth noting that this applies to each individual "dwelling," which means that it can be claimed for each apartment unit or townhome in a larger development. The Act also makes it easier for people to qualify for this credit.
26 U.S.C. §25C Individual Tax Credit for Energy Efficient Residential Improvements and Appliances – According to this Act, individuals can get a tax credit of 10 percent (up to $500) of the cost of certain energy-efficient upgrades to an existing property, such as insulation and cooling and water heating appliances.
With these credits in mind, 2013 might be a great time for individuals to make energy-efficient upgrades to their homes. To get started, contact a home inspection contractor. They can perform an energy audit and help you determine next steps.