Many tax credits for home improvements are expiring at the end of 2010. What energy-efficient improvements are still worth the money? As expert Matt Grocoff points out, there are quite a few.
As the year draws to a close, many homeowners are scrambling to complete home improvement projects that would earn a federal tax credit. Homeowners who want a more energy-efficient home might be surprised to learn that there are several home improvement projects that can still bring a large return on investment (ROI), even without that extra tax boost from Uncle Sam.
Energy-efficient improvements that boost your bottom line
"The first $6,500 that you spend on energy improvements are the biggest bang for your buck," Grocoff points out. "The simple things like insulation, sealing up your house and more energy-efficient lighting could cost you $6,500 or less, but may cut about 30 percent off your energy costs."
To determine the best places to spend that initial investment, Grocoff recommends a home energy assessment. This assessment will help you determine where you are losing energy and what improvements can make a quick but lasting impression on your bottom line. Since there are many incentives for utility companies to help pay for an energy assessment, you might even get the job done for free.
Once you have the assessment in hand, what's next? Put the money where it matters. "If you had $500 to invest right now, and you could choose a CD, a savings account, stocks or home improvements, energy-efficiency would win by a huge margin when it comes to return on investment," Grocoff says.
It is important to plan smart, however, when deciding which home improvements have the most impact. For instance, Grocoff points out that installation of granite counter tops can return 80 percent of every dollar that you spend when it comes to the value of your home. Yet, for every dollar that you save in energy costs, you can improve the value of your house by $20. That's definitely a good ROI!
Home improvement projects you can do right now
There are numerous projects you can undertake right now that will make your home more comfortable. Those projects start paying for themselves immediately, as they shave dollars off your utility bills.
"Insulation and sealing up your house should always pay for itself," Grocoff says. "But even if it didn't, it makes your home much more comfortable, and that makes it worthwhile."
The lighting in your home also contributes to the comfort factor. "Anyone who still has incandescent light bulbs should just take a 20-dollar bill and set it on fire right now," Grocoff says. As the industry phases out incandescent light bulbs over the next few years, he recommends homeowners switch to lighting that is not only energy-efficient but that has the right "coloring" for your room. The right light bulb can both flatter a room and save you 70 to 90 percent on lighting costs.
Another good place to find energy savings is in your shower. "The typical shower head uses 2.5 gallons of water per minute," Grocoff says. "By switching to a high-efficiency shower head that uses 1.5 gallons per minute, you are saving 11,000 gallons of hot water per year for a family of three. This saves both money on your water bill and the energy it takes to create that hot water." Expect to spend up to $100 for a high-quality, energy-efficient shower head that you can install in a matter of minutes.
Finally, don't forget to eradicate the vampires in your house. Even when your television, DVD player and other electronics are turned off, they are still pulling electricity from the wall outlet. This silent power draw is known as "vampire power."
A "smart strip" can take care of that problem. Simply plug a primary electronic device, such as your television, into the main outlet on the strip. Then plug all the peripherals--video game systems, DVD players and the like--into the other outlets on the strip. When you turn off your television, all the others turn off automatically. They also stop pulling power from the outlet. Over time, those incremental savings adds up.
Will the tax credits ever return?
Keep in mind that many of the high-dollar credits, such as those for solar panels and geothermal units, are still in effect. But Grocoff is certain that the other tax credits will come back, perhaps in the form of something even better. "There is a program called PACE--Property Assessed Clean Energy--that has bipartisan support in Congress right now, and it could be a great thing for homeowners," Grocoff says.
PACE is an initiative that includes tax incentives, rebates and financing options that would allow homeowners to finance energy-efficient improvements, and pay for them over time, as an assessment on their property taxes. Legislation for the bill is pending.