Green Home Improvements Give the Green Light for Tax Breaks in Austin

By Jennifer Riner
Trulia

During tax season, maximizing tax refunds or minimizing taxes owed is on the minds of many. For homeowners, the mortgage interest deduction is a must-do, but fewer understand the tax benefits of sustainable home upgrades.

Green home improvements deliver three-fold benefits. First, your household’s carbon footprint tapers and helps support global conservation concerns. Second, eco-friendly systems use less energy, helping minimize utility costs. Finally, although some federal tax incentives for green improvements expired in 2011, eco-conscious homeowners still can benefit from government tax credits.

Residential solar panels abound at the Mueller development in Austin.
Photo: Electronic Component News

Green Incentives in Austin

The first two motives aside, put your potential tax savings into perspective. Here are the exemptions and rebates available in Austin, TX.

Even the Lone Star State, known for being economically intertwined with the oil industry, wants residents to participate in renewable energy. Texas law includes a few allowable exemptions and deductions for homeowners to consider, such as the property tax exemption for solar and wind energy devices.

Under Texas Tax Code 11.27, residents who install eco-friendly solar and wind systems in their homes are not taxed for sustainable upgrades that boost their property value. Say you buy a home in Austin for $300,000 and install $20,000 worth of approved solar or wind-powered technologies in the following months. You’re not required to pay property taxes on the difference. Eligibility is earmarked for systems like solar panels, wind, biomass and solar pool heating.

In addition to tax breaks, Austin homeowners can receive residential rebates and loans for sustainable heating, air conditioning, ventilation, lighting, pools and water heaters. Home composting systems also can earn a $75 rebate, either before or after purchase, depending on the merchant.

Homeowners in Austin and elsewhere should consider the renewable home energy federal tax credit, which is available through Dec. 31, 2019. This incentive allows all U.S. taxpayers to claim 30 percent of the cost of solar electric and water-heating systems with no cap. The claim does not have to for your principal residence. After 2019, the 30 percent credit decreases each year and eventually expires at the end of 2021.

Dual-pane windows, new insulation, low-flow plumbing, tankless water heaters and solar panels are just a few sustainable renovations that might curb taxes, increase property value, cut utility costs and provide peace of mind. Even improvements that aren’t tax-incentivized, like programmable Energy Star thermostats, help reduce heating and cooling costs by up to 10 percent.

Going green is largely a personal decision, but homeowners should seriously consider their carbon footprint when seeking new ways to save.

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Top photo: Alba Energy