Energy Saving Upgrades
Almost Free!!
When talking about how energy efficient homes are today my thoughts often have me asking the question, “How can we get new homes any tighter and more efficient than they are today?” The answer is we can, but at what cost and how long is the payback which every new home buyer wants to know. For the huge increase in equipment costs and doubling the cost of superior proven insulation methods, is it just a diminishing return?
Surprisingly the answer is yes. The additional cost over time, and energy prices not going down any time soon, you will easily recover those costs. Ten years in the life of a home is a relatively short time to recover those initial costs when you think of a homes useful life or over 100 years. Even if you don’t get to take full advantage in the short term, buyers will gladly pay a higher price for a superior efficient home.
Now for some really great news for those who choose to go this route when building a new home. You can get a tax credit, not a deduction, of 30% the initial cost of those improvements for a new Geothermal System. With those incentives you can get a home with a geothermal heating system unit for as little as $3,000 in additional cost, making the payback well under 5 years!
Whether or not you like the government incentive programs, someone is going to take those funds and improve their home. Let’s take an example of a home built in Cedar Falls: Total cost of the geothermal system, $30,000 for a home of around 2000 square feet). Now lets deduct the dollar for dollar tax credit of 30% ($10,000 in this case) now the geo heating and cooling system is costing you about $5,000 above a standard super high energy efficient heating system which is approximately $15,000. You must comply also with the Energy Star Program however the good news is most builders in our area comply with this regulation anyway.
“This credit for geothermal, heat pumps, and other innovative energy savings system products does not have to be for your principal residence like the other energy credits ; so, rental units, second homes, etc... are all eligible. Go to www.EnergyStar.Gov to find all about what credits and energy efficiency products are available for you. These credits for geo systems expire on 12.31.2016. You do have some time to plan but like all tax credits, subject to change, like cash for clunkers when the allocated funds run out. So I would act now. There are also many tax credits for existing homes and most of those expire at the end of 2010.
Sounds really good so far right? Well it gets better, Cedar Falls Utilities will rebate you another $600 dollars for each ton of a system required for heating and cooling a home, in this case the home would take about 5 Tons of unit size. $600.00 X 5 is a rebate of $3000.00. Your net cost is $2,000.00 and a heating and cooling system that is 50% more efficient to run than a traditional forced air heated and cooled home. The payback now is almost immediate. In Waterloo, and other areas of the Cedar Valley that Mid American Energy is serving, they give a flat rebate of $2,000.00 per installed unit.
At Fairbanks Builders we have made a commitment to geothermal by offering the system, in all of our Villa Condo Single Family Homes in Cedar Falls. We will pick up the balance of the cost between the adjusted tax cost of the geo system and the cost of a traditional high energy efficient system up to $3,000.
Stable building costs, some severely reduced costs, available local home Builders that need to fill a schedule, interest rates at 4.5% for a fixed 30 year loan most days, low home inventory if you need to get your current home sold (Market time of 97 Days according to the WCF Board of Realtors) First time homebuyer credit of $8,000 and a $6,500 tax credit for anyone buying a home.
I have never seen a better time to invest in building or improving a home in 35 years of building. When the housing market improves the credits will disappear.
“Invest when others are fearful and sell when others are confident. Warren Buffet 2009.
If you have questions about any of these programs feel free to contact Craig
Craig is immediate past president of the Northeast Iowa Association of Home Builders
Also a Certified aging in place specialist. (CAPS) NAHB
