Last Call for Energy Efficiency Homeowner Tax Credits

RISMEDIA, Wednesday, December 07, 2011— The Alliance to Save Energy urges American consumers to give themselves the gift of energy efficiency this holiday season—and reap the benefits when they file their 2011 federal tax returns—by taking advantage of tax credits for energy efficiency home improvements. The tax credits of up to $500 are set to expire on December 31, and Congress may not renew them for 2012.

"The outlook for renewal of federal energy efficiency tax incentives is uncertain at best," stated Alliance President Kateri Callahan, "so we encourage homeowners to complete those upgrades before the ball drops in Times Square at midnight on New Year's Eve.

"Making efficiency improvements this year will lower home energy bills and improve home comfort for years to come, while also reducing 2011 federal income tax bills," Callahan added. "Energy efficiency is truly the gift that keeps on giving!"

The specific home improvements that qualify for tax credits fall into a number of categories:

• Exterior windows, skylights and storm windows. 
• Insulation, exterior doors, roofs, storm doors and products to seal air leaks such as caulking, weather stripping and foam sealants. 
• Highly-efficient heating and cooling equipment, including central air conditioners, heat pumps, furnaces, boilers, water heaters and biomass (e.g. corn) stoves.
• Each product category also must meet specific energy efficiency requirements, which are spelled out on the Alliance's tax credits web page. 
• Percentage and/or dollar limits on particular energy-efficient upgrades include:
• 10% of the cost of insulation and sealing materials, exterior doors and roofs. 
• 10% of the cost, up to $200, of exterior windows or skylights. 
• Up to $300 for electric heat pump water heaters, electric heat pumps, central air conditioners, biomass stoves and natural gas, propane or oil water heaters. 
• Up to $50 for advanced main air circulating fans. 
• Up to $150 for natural gas, propane or oil furnace or hot water boilers.

And to see what energy efficiency can do in your home, check out the Alliance's home energy tips videos produced with energyNOW!

For more information, visit http://www.ase.org/.

clear skies,

Doug Reynolds

 

www.BHGshortsales.com

Factoring energy efficiency into a home's value

Under the SAVE (Sensible Accounting to Value Energy) Act, estimated energy-consumption expenses for a house would be included as a mandatory new underwriting factor.

By Kenneth R. Harney, LA Times

When you apply for a mortgage to buy a house, how often does the lender ask detailed questions about monthly energy costs or tell the appraiser to factor in the energy-efficiency features of the house when coming up with a value?

Hardly ever. That's because the big three mortgage players —Fannie Mae, Freddie Mac and the Federal Housing Administration, which together account for more than 90% of all loan volume — typically don't consider energy costs in underwriting. Yet utility bills can be larger annual cash drains than property taxes or insurance — key factors in standard underwriting — and can seriously affect a family's ability to afford a house.

A new bipartisan effort on Capitol Hill could change all this dramatically and for the first time put energy costs and savings squarely into standard mortgage underwriting equations. A bill introduced Oct. 20 would force the three mortgage giants to take account of energy costs in every loan they insure, guarantee or buy. It would also require them to instruct appraisers to adjust their property valuations upward when accurate data on energy efficiency savings are available.

Titled the SAVE (Sensible Accounting to Value Energy) Act, the bill is jointly sponsored by Sens. Michael Bennet, a Democrat from Colorado, and Johnny Isakson, a Republican from Georgia. Here's how it would work: Along with the traditional principal, interest, taxes and insurance (PITI) calculations, estimated energy-consumption expenses for the house would be included as a mandatory new underwriting factor.

For most houses that have not undergone independent energy audits, loan officers would be required to pull data either from previous utility bills — in the case of refinancings — or from a Department of Energy survey database to arrive at an estimated cost. This would then be factored into the debt-to-income ratios that lenders already use to determine whether a borrower can afford the monthly costs of the mortgage. Allowable ratios probably would be adjusted to account for the new energy/utilities component.

For houses with significant energy-efficiency improvements already built in and documented with a professional audit such as a home energy rating system study, lenders would instruct appraisers to calculate the net present value of monthly energy savings — i.e., what that stream of future savings is worth today in terms of market price — and adjust the final appraised value accordingly. This higher valuation, in turn, could be used to justify a higher mortgage amount.

For example, Kateri Callahan, president of the Alliance to Save Energy, a nonprofit advocacy group and a major supporter of the new legislation, estimates that a typical new home that is 30% more energy efficient than a similar-sized average house will save about $20,000 in utility expenses over the life of a mortgage. Under the Bennet-Isakson bill, appraisers would be required to add those savings to the current market valuation of the house. In this instance, Callahan says, the increase in value would be about $10,000.

clear skies,

Doug Reynolds

 

www.BHGshortsales.com