Green Mortgages for Eco Friendly Upgrades

AMA7-14-13In the housing world, green is the new black. Energy saving and eco friendly upgrades to residential and investment properties are not only practical and (eventually) economical, they’re e also trendy, upping a house’s value and its appeal by their very presence. But paying for those green upgrades and getting a return on the investment can be tricky – especially when solar energy is involved. Tax credits, government energy subsidies and even green mortgages can help.

Tax Credits and Deductions

Upgrades to make a property more energy efficient or environmentally sensitive, such as installing new, double paned windows, replacing insulation and ductwork, or converting to solar heating can be deducted from taxes as part of the long list of deductions and credits for repairs, maintenance and renovation available to property owners. Some, for repairs such a replacing a broken window with a more energy efficient version, can be deducted immediately, while others, such as installing a new roof, may be amortized over the life of the investment. But virtually any repair or upgrade can qualify for a deduction under the current, owner friendly tax code.

Energy Subsidies
A variety of state and federal energy programs offer help for homeowners who want to tern their properties green. Some involve programs dedicated to a specific type of improvement, such as weatherization or solar energy, while others relate to water and utility usage. Help typically comes in the form of a voucher, a free installation or a credit toward energy bills. Consumer experts warn, though that scams can be rampant, especially involving offers to install free or low cost solar panels. The FHA and local utility companies can provide legitimate information on what kinds of subsidy and credit programs are available.

Green Mortgages
A relatively new offering by some lenders is the “green mortgage,” a secondary loan specifically to help with environmental upgrades that’s piggybacked onto a borrower’s current mortgage. Not a refinancing or second mortgage on the property itself, the green mortgage can be added on to an existing mortgage or put in place with a new one. Borrowers pay just one mortgage payment for both loans and use the money to make energy saving upgrades.

Going green pays in many ways. Tax breaks abound. Homes run more efficiently, lowering bills and repair expenditures. Environmentally conscious responsible renters are attracted to homes offering these kinds of upgrades. And green properties command higher prices in many markets. For income property investors following Jason Hartman’s investing principles green upgrades can mean more green in the bank.

Background:
MortgageLoan. “Green Mortgages –Energy Efficient Mortgage Guide.” MortgageLoan.com. 23 April 2013

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