It's Tax Season Again, Are You Getting Your Money's Worth?
It’s that time of year again folks. The time that we take all of those receipts that were piling up, sort through and hand 'em on over to our favorite accountant. Tax incentives are numerous for federal taxes and NY state taxes as well, in the case of homeowners. Although it should be noted that types of residences do differ in the deductions you’d be able to apply for. For example, if you have a brownstone it’d be easy for you to have a green roof, whereas for condo living this may not apply. Here are some tax deductions you should take a look at, especially if you’ve done some home greening recently, and even if you haven’t.
If you’re green and you know it, stick out your hand, and ask the IRS for your tax credit. Installing energy-saving windows, solar panels, and even simple weather stripping, can result in a tax credit. New York State is willing to give plenty of tax credits on a number of green home improvements. Federally as well, there is an incentive program for having a lighter carbon footprint.
New York - Energy Conservation Improvements Property Tax Exemption
This is a property tax incentive, that is for residential homes in NY. If you have added equipment insulation, water heaters, boilers, heat pumps, central air, programmable thermostats, duct/air sealing, the list is lengthy and goes on. Basically, if you have added eligible energy efficient technology to your home than you could qualify for this exemption which amounts to 100% of the value added to your home due to your energy efficient improvements.
New York - Residential Solar Tax Credit
If you’ve installed solar panels, solar water heat, or solar space heat you are entitled to this personal tax credit that is applicable for residential or multi family homes. Your installations must be grid connected and metered. The maximum incentive is $5,000 and 25% of system costs.
New York - Green Roof Abatement Program
You can’t just throw some plants onto your roof and claim that it’s a “green” roof. The roof has to be covered with 50% of green space, 80% of that being vegetation. Two or three potted plants will not cut the bill here. The roof covered in green, must also be covered with a weatherproof and waterproof roofing membrane, not to forget that it must also have insulation drainage and root barrier layers, and at least two inches of natural or simulated soil. With all of these installations, the abatement that would be received is $5.23 per square foot up to $200,000 or the total tax liability of the building for the tax year you are applying for, which is a 73¢ increase from last years abatement.
New York - Refundable Clean Heating Fuel Tax Credit
This credit is applicable for residential homes and offers 1¢ per gallon of biodiesel mixed with standard home heating oil, and allows a max of 20¢ per gallon. If you’re mixing 10% biodiesel to 90% standard heating oil, than you would get 10¢ per gallon as a credit. If you’re heating green, then don’t miss out on this credit, or you’ll be giving away the green.
Federal - Residential Energy Efficiency Tax Credit
This is a personal tax credit expired officially on 12/31/2013. If you have added any qualifying equipment installed during 2012 or 2013 then you are eligible for this credit. The equipment that was installed in the existing residence must be new and in compliable with safety standards in the tax code. For the tax year 2013 the max credit limit is $500. Also, if you have heard of this federal credit before and have already applied for it in a previous year, you are ineligible to attain this credit again.
Outside of the emerald city of greendom there are tax abatements, exemptions, and tax deduction programs that homeowners, condominium owners, and co-op owners alike can take part in. The STAR program and Condo/Co-op Tax Abatement are two programs that if you do qualify you should be using, and are NYC offered. To use these programs you must register with your tax office.
New York - Two Types of STAR Programs:
Basic Star Exemption - which is available for owner-occupied residences, where the income generated is less than $500,000. This program would then exempt the first $30,000 of the value of a home from school taxes.
Enhanced STAR - gives an increased benefit for owner occupied residences of senior citizens. This would exempt the first $64,000 of the full value of a home from school taxes.
New York - Condo/Co-op Tax Abatement Program
The criteria is that this must be your primary residence, if the apartment is owned by a trust that’s OK as long as you are the beneficiary of the trust and this is your primary residence. You will be eligible for a certain benefit, based upon the average assessed value of Residential Units, in the year of 2013/2014. Here’s an example, if your condo/co-op is worth $60,001 and above you can receive in benefit 17.5% of the valued amount. These two programs can be overlooked easily if you haven’t applied for them, and their two good programs to help you get some money back on those tax refunds, keep an eye out for those deadline dates.
Federal - Home Office Tax Deduction
Another in-home tax deduction that is commonly used and widely misinterpreted is the deduction of the home office. This tax deduction used to be very complicated with those applying for it, requiring applicants to itemize all their expenses, now it’s simple to apply for. Instead of filling out a form that includes 43 lines, there is only one line that needs to be filled on a schedule C. If you are eligible for this deduction meaning that you can claim that your business or home is “regularly and exclusively” used for business then you can take the standard deduction of $5 per square foot max of 300 square feet and the max deduction is $1,500.
Federal - Cancellation of Mortgage Debt
Failing to report that your debt has been forgiven can lead to heavy penalties from the IRS. This tax break is known as CODI, which stands for Cancellation of Debt Income. If you have had a debt forgiven in accordance with your mortgage this includes foreclosure, short sales, defaulted equity loans, you could be eligible to CODI Income Tax Exemption. CODI exempts you from incurring income tax liability, which usually recorded as income, but not in this instance.
Take as much advantage as you can to save as much money as possible. The way to do that this tax year, is to make sure that you are hitting all of the bases when it comes to credits, exemptions, and abatements. Missing out on these tax credits, could leave your pockets hanging inside out come April.