Читать книгу Deduct Everything! - Eva Rosenberg - Страница 11

ASIDE FROM BEING A great place to live, your home can provide you with a wealth of credits if you know how to go after them. The credits can come from a variety of sources, not just from the IRS.

Tip #62:

Look beyond the IRS for tax credits and rebates. Great places to look are your state, your city, your utility, and even your various appliance manufacturers. You may get access to rebates and refunds in addition to tax credits. Let’s start with the simplest kind of credit.

Tip #63:

State renter’s or homeowner’s credits. Some states provide some kind of credit to low-income renters and/or seniors, since their rent covers a portion of the landlord’s property taxes. For instance, California offers renters $60 (single or married filing separately) or $120 (all other statuses) (https://www.ftb.ca.gov/individuals/faq/ivr/203.shtml). Pennsylvania offers a property tax/rent rebate program worth up to $650 depending on your income, age, and disability level (http://www.revenue.pa.gov/generaltaxinformation/propertytaxrentrebateprogram/pages/default.aspx). To find out if your state offers anything similar, just Google “[state name] property tax credits,” “[state name] renter credit,” and “[state name] renter rebate.” One of those searches should get you what you want. Of course, you can always go directly to your state’s website to search that. Go to http://www.taxadmin.org/state-tax-agencies and look up state tax forms here: http://www.taxadmin.org/state-tax-forms.

Tip #64:

Before we look at what the IRS offers you, it’s important for you to find the benefits that your state, city or utilities can provide. They can provide rebates, tax credits, or special financing. The Energy.gov site is maintained by the US Secretary of Energy and his or her staff. You can look up available benefits by selecting your state. Using this as a starting point, you can see what cost reductions you have available to you before getting to the IRS tax credits. Bear in mind you need to reduce the costs you report on any IRS or state forms by any benefits you get from these sources. In other words, if something costs you $5,000 and your utility gives you a rebate of $2,000, you will only report a cost of $3,000 to the IRS. You don’t generally have to pick up the rebates as income, since you are reducing the cost of repair or improvements. Read your state’s rules to find out how they want such rebates reported on their forms.

Tip #65:

Depending on your location or your income level, you might qualify for local or federal subsidy programs that will give you grant money or low-interest loans to help pay for your alternative energy devices. The White House has made renewable energy (https://www.whitehouse.gov/the-press-office/2015/08/24/fact-sheet-president-obama-announces-new-actions-bring-renewable-energy) a major goal, so you will find money flowing to communities. In particular, seek out federal funding from the PACE (property-assessed clean energy) program (http://energy.gov/eere/slsc/property-assessed-clean-energy-programs). One of the interesting things about this is that the repayment for the loan becomes part of your property tax rather than a mortgage lien on your property. The two benefits to this are that the loan balance doesn’t affect your FICO score, and when you sell the house, the buyer continues to make the payment. So you get more cash out when you sell. You don’t have to pay off the loan. Be sure to disclose this to all potential buyers.

Tip #66:

The Nonbusiness Energy Property Credit, Form 5695, Part II (https://www.irs.gov/pub/irs-pdf/f5695.pdf). I’ve seen people work themselves into a frenzy to nab this credit. This is for adding insulation to your home or replacing windows, doors, or roof components designed to reduce heat loss or gain. While those doing those things might reduce your utility bill or improve the appearance of your home, the IRS tax credit for it is minimal. The entire lifetime credit amount is limited to $500 for all these improvements. (I have seen new windows costing more than $5,000.) By “lifetime,” Congress means that once you have used all $500 of this credit, you may never get it again. If you are only making these improvements to get the tax benefits, think again. But do look to see if your state or utility offers any rebates.

Note: This is another of those credits that expire. This was extended through December 31, 2016, as part of the Internal Revenue Code as Section 181 of the PATH Act of 2015. Please see Bonus Tip #270 for more details.

Tip #67:

The Residential Energy Property Credit, Form 5695, Part I (https://www.irs.gov/pub/irs-pdf/f5695.pdf). This is the credit worth snagging. This gives you back 30 percent of your entire expenditure on installations of solar, geothermal, or wind energy power units and power cells. As we write this, this IRC Section 25D (https://www.law.cornell.edu/uscode/text/26/25D) credit is good for all installations paid through December 31, 2016. Naturally, the devices must meet the specifications for allowable units (https://www.energystar.gov/about/federal_tax_credits). Make sure you have all the receipts and paperwork from the contractor, including written verification that the devices meet the standards for this credit. Allowable costs include “any labor costs properly allocable to the onsite preparation, assembly, or original installation of the residential energy efficient property and for piping or wiring to interconnect such property to the home” (quoted from the instructions—that’s why the wording is so stilted). Incidentally, this credit is only good on your main home or second home (like a vacation cabin), not rental property.

Tip #68:

If you are like my husband and are capable of doing your own installation of practically anything, you will undoubtedly save a lot of money. (But the job will take forever!) If you are only a master repairer in your own mind, please, be realistic and hire a professional—or your home will become “The Money Pit” (http://www.imdb.com/title/tt0091541). Never mind, let’s believe you are, indeed, a master! The bad news is, the value of your labor for the installation work does not count as an installation cost. However, all the parts, supplies, and expendable tools you buy specifically for this project may be taken into account. But don’t include the tools you buy that you will be able to use in the future. If you hire casual help—like those nice, convenient, inexpensive guys standing in front of Home Depot or your local hardware store—don’t expect to add those costs to the installation either. In fact, don’t even tell anyone about them. (A tax professional I knew hired some of those fellows to help him with his landscaping. His neighbor turned him in to California’s Employment Development Department. He not only was forced to hire a licensed landscaper but faced heavy fines for hiring workers without putting them on payroll and additional fines for hiring illegal aliens. So beware of neighbors who hate you.)

Tip #69:

By hiring a professional, you will save a lot of time and money getting the installation and setup done correctly. Besides, they are also familiar with the paperwork and can answer many of your questions. Heck, they might be able to help you fill out the paperwork or give you forms that are already filled in. They might even be able to get you discounts on the materials and supplies.

Tip #70:

Most of the allowable units will have the Energy Star certification. But not all Energy Star units will qualify for the credit. The Energy Star website will help you find acceptable products, credits, and perhaps even local builders: https://www.energystar.gov.

Tip #71:

Let’s do a reality check. Why do you want to install this alternative energy system in your home? Do you live off the grid or far from the nearest town? Do you live in an area where there are frequent power outages? Are your electricity bills outrageously high due to the constant need for air conditioning in the summer and heating in the winter? Then this probably makes sense. Are you a Green advocate and want to make a statement? I admire you and wonder why these alternative energy systems haven’t been made a standard part of new home construction over the past fifty years.

I was in Israel in 1977 and practically every home had something that looked like a garbage can on the roof. It turned out that they were solar water heaters. We could have done that in the entire southern United States where we have sun for about two-thirds of the year—and even made the units look better. In fact, if localities had started to mandate solar, geothermal, or wind energy as appropriate to their areas, the costs of such units would have dropped dramatically by now. For instance, Iceland takes advantage of their natural resources (primarily geothermal). About 99 percent of their energy is from renewable sources, according to Scientific American (http://www.scientificamerican.com/article/iceland-geothermal-power).

OK, why am I wasting your time with these (to me) fascinating tidbits of information? Because I want you to think twice before you make this major expenditure for the wrong reasons. Although you might get excellent tax benefits, you will still be out-of-pocket for several thousand dollars. So please do a financial analysis of this decision. You see, my husband isn’t just smart with his hands, he’s also a rather practical fellow. And speaking to my interest in solar energy units, he pointed out that many of the components only last for about ten years, then need to be replaced. So when doing your financial analysis, it’s important to factor in the expected life of each part of your system and the costs to replace them, as well as the costs for routine maintenance of the system. As a wife, let me add another factor. How much time does your spouse have to spend, during evenings and/or weekends doing the maintenance, if you aren’t paying for the servicing? To me, the little free time we have to enjoy each other is worth more to me than saving a few bucks.

Tip #72:

Good news and bad news about this Residential Energy Credit. First the bad news—two facts:

1 1. When using this credit, you must reduce the basis (tax cost) of your home.

2 2. This is a nonrefundable credit. So if your tax liability is not high enough to use all or part of the credit, you don’t get any money back at all. So you might have seriously underestimated the cost.

The good news? While the credit is not refundable, it can be carried over to the following tax year. (One year only.) Make sure you have enough income and tax liability to use up the credit. If you don’t expect to have enough income, this is a good time to get an extra job; start a quick, profitable hobby; collect a bonus; or roll over retirement or IRA funds to a Roth IRA. Do some tax planning to see how the numbers balance before doing anything. And please take this into account when doing your computations.

Tip #73:

Here’s a proposed cost analysis form for you to consider using:

Step A

Add all the following amounts:

1 1. System cost, including all components:

2 2. Permits from city, county, or local authority.

3 3. Installation costs.

4 4. Depending on the length of time to finish the installation, how much will it cost and if you need to spend any nights in a hotel or with family or friends. Note: Staying with family or friends is never free. Factor in costs of gifts, chipping in on groceries, getting on each other’s nerves, and that you will have to repay the favor at a time most inconvenient for you.

5 5. Cost of routine maintenance and how often this must be done. (Remember, the panels need to be cleaned regularly or they lose their efficacy.)

6 6. Monthly costs (add them in × 12).

7 7. Cost of major repairs, or parts replacement and how often these need to be replaced (divide the costs by the number of years in the life of the parts).

8 8. How long you are planning to live in this house. If less than the life of the parts, divide your costs by the number of years you plan to be there to use the system.

9 9. The cost of financing. How much interest will you pay for the loan you take out to install all this? Divide the total interest you will pay over the life of the loan by the number of years the loan will run. That will give you an average annual interest cost.

10 10. Anything else that crops up (add as many lines as you need).

TOTAL STEP A:

Step B

Add all the following amounts (if applicable). These are good things:

1 1. Rebates from your vendor or manufacturers.

2 2. Rebates from your utility companies.

3 3. Rebates from local government units.

4 4. Rebates or credits from your state.

5 5. Any other rebates or credits you get that reduce your cost.

6 6. Amount you expect to earn each year if your utility company wishes to buy your excess power to use in their grid. (Reduce whatever the system sales folk tell you by at least 50–70 percent.)

7 7. Any other goodies that come your way (use as many lines as you need).

TOTAL STEP B:

Step C

Deduct the total rebates and discounts you received in Step B from your Step A costs. This will be the net cost you can use to determine your IRS energy credit.

Step D

Deduct your federal (IRS) energy credit (30 percent × Step C) from the net costs you arrive at in Step C.

This will give you your net cost for the use and installation of your new energy system after all rebates and credits. Divide this by the number of years your system is expected to last, before you have to replace most of it.

That’s your annual cost.

Step E

Add up the utility bills that you realistically expect the system to replace. Review your utility bills carefully to see what it really covers. For instance, an alternative energy unit will not reduce your cost of trash pick-up, use of the sewage system, water usage, or certain other costs that may be buried in your water and power bill. It is likely to reduce cost of gas and/or propane and the need to pay for deliveries. (Did you know there were this many things you pay for in that single utility bill?) Once you determine how much you really will save by installing this system, compare it to the annual cost you arrived at in Step D.

Are you going to save any significant dollars? If it turns out that the installation will end up costing you more than you will save, you have to decide if you want to do it anyway for ecological, emotional, or other reasons. But at least you will make the decision with your eyes open. Note: In most cases, we learned the costs were higher than the benefits.

Step F

One last consideration to take into account if this is a financial loser. Will adding this system increase the market value of the home when you ultimately decide to sell it? If so, by how much? Alternatively, how much will it reduce the sales price of your home if the system looks ratty and shabby by the time you’re ready to sell?

If you have trouble sleeping at night, consider reading these reports from the National Renewable Energy Laboratory (NREL). One is from 2009 about residential photovoltaics (http://www.nrel.gov/docs/fy10osti/46909.pdf). The other is about heating water, from 2011 (http://www.nrel.gov/docs/fy11osti/48986.pdf). My husband is actually fascinated with this kind of material. For me? It’s gibberish. Important gibberish, no doubt, but way over my head.

Tip #74:

What about leasing these systems instead of buying them? That could be a great alternative. There are lower paperwork demands, the leasing company handles the maintenance, and you just sit back and enjoy the reduced utility bills, right? You generally have to pay for the privilege. Expect to pay about $3,000 or so for them to set it up (even if they say it’s free). You will not get any tax credits. They will keep them all. If this is installed on a rental property, you will not be depreciating the cost of the unit(s) because you didn’t pay for them. Ask questions. If your house or property generates excess power and sends it to the grid, who gets the money—you or the solar company? If you will start paying the solar company for your utilities instead of the local utility company, what protection do you have against price increases? Read all contracts very carefully so you understand all your obligations. If you don’t understand some clause—ask. Do not let them bully you or charm you away from answers. The contract will generally run for ten to twenty years. You need to make sure it is transferable to a new owner and disclose the terms to any potential buyer. Make sure you are not hampered from selling the home because of this. Find out if they will put a lien on your home, and if so, for how long? You don’t want this affecting your credit. What are your obligations to maintain the roof and other adjacent parts of your home or property? For instance, if there is a tree overhanging the roof, how often do you have to trim it back (or will they)? What costs or penalties will you face if your tree damages their solar panels? Will your homeowners insurance cover this, and how much extra will it cost? Will the solar company carry insurance? What are their obligations if their installers are careless or sloppy and create roof leaks or other damage to your home? If they open up part of the roof or wall, or cut into your patio or yard, do they pay to close it up or to fix, repaint, or replant? And what if they go out of business, go bankrupt, or sell the company? Who owns your system then? Who takes care of it? So if you are considering the leasing option, be sure the company is financially solid and not planning to go public or sell their business while you live in the house (if possible).